SEC approves online crowdfunding rules
The Securities and Exchange Commission on Friday approved crowdfunding rules that will give small investors the opportunity to buy a stake in private companies looking to raise money.
The rules have been years in the making after President Obama signed the Jumpstart Our Business Startups Act in 2012, which authorized the commission to write the crowdfunding rules. The Friday vote completes the last major part of the law, with rules slated to take effect 180 days after the rules are published in the Federal Register.
Small investors would not be able to invest more than 5 percent of their income on crowdfunding investments. People who make more than $100,000 a year would be able to invest up to 10 percent of their annualincome.
All crowdfunding transactions must be made through a portal registered with the commission. Crowdfunding portals would also have to comply with a number of rules to monitor investors and businesses to help reduce risk and fraud.