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SEC allows collecting money from crowdfunding investors

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Staff writer ▼ | October 30, 2015
The Securities and Exchange Commission (SEC) approved new rules that will allow start-up companies to more easily raise money from investors using ne technologies such as online crowdfunding sites.
New technologies   To allow start-up companies to more easily raise money
There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need,” SEC Chair Mary Jo White saidt.

The Title III equity crowdfunding ruling that was approved Friday will allow non-accredited (mom and pop) investors to invest in crowdfunding offerings subject to certain limits and rules set by the SEC.

Sstartups will only be allowed to raise $1 million in any 12-month period through crowdfunding, and the companies, in an effort at transparency, must agree to provide certain information including a financial statement reviewed by an independent accountant.

Investors will be limited to how much they can invest based on their income. And individual investors will be limited to purchasing a maximum of $100,000 in securities per year through crowdfunding deals, according to the SEC.

The crowdfunding sites will have to be registered with both the SEC and securities industry regulator FINRA.