In October, the Securities Exchange Commission adopted rules to govern the most controversial section of the 2012 Jumpstart Our Business Start-Ups Act (JOBS Act). Starting as early as January, investors will be able to begin investing up to $5000 (or as much as 10% of one’s annual income, maxing out at $100,000) on an annual basis in firms marketing and issuing equity via online platforms similar to Kickstarter and Indiegogo. The SEC had adopted rules for other sections of the JOBS Act in the past several years, but the threshold auditing requirements for companies issuing equity under these rules were still difficult to overcome for most start-ups. These new rules adopted also reduce the barrier to entry for would-be investors; no longer do investors need a certain level of income or assets to be able to browse and purchase non-publicly traded securities marketed online.
By: Spencer Durden
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