National Crowdfunding Association Begins Work with SEC on Crowdfunding Regulations

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The National Crowdfunding Association has commenced its work with the SEC in developing crowdfunding regulations for the newly authorized investment crowdfunding industry.

The SEC regulations will have to address the need for simplicity in these small transactions, while also being effective tools for protecting investors.

Today the National Crowdfunding Association (NLCFA, took the first steps in its mission to work closely with the SEC as the SEC begins drafting crowdfunding regulations under the recently signed JOBS Act. David Marlett, the association’s Executive Director, said, “One of the key objectives of the association is to represent the industry to the SEC and to the crowdfunding self-regulatory organization which will arise in the coming months.” Marlett is the CEO of the crowdfunding consulting firm, CrowdFund Advisors,

The NLCFA, which launched two weeks before the President signed the JOBS Act on April 5th, has grown exponentially ever since. The association’s members include all industries and professions affected by the crowdfunding provisions of the Act, including crowdfunding portals, issuers (entrepreneurs seeking financing), consultants, attorneys, accountants, venture capital firms and investment banks, and software vendors to the industry.

Fellow NLCFA board member, Sara Hanks, added, “The SEC regulations will have to address the need for simplicity in these small transactions, while also being effective tools for protecting investors.” Ms. Hanks is a longtime Washington D.C. securities attorney who served as General Counsel for the TARP Congressional Oversight Panel under Harvard professor and current U.S. Senate candidate in Massachusetts, Elizabeth Warren. In addition, Ms. Hanks is CEO of CrowdCheck,, which provides due diligence services for crowdfund investors, venture capital firms, and portals.

In an effort to better represent the varied interests of its members, the NLCFA asked them the following:

1.    What are your top three concerns regarding the SEC’s crowdfunding regulations?

2.    Will you be looking for authorization of “sidecar” preferred (Reg D) offerings to your crowdfunding offerings? If so, how are you hoping such sidecars will be allowable?

3.    Are you planning to begin general solicitations for Reg D offerings after the 90-day period ends?

4.    If you’re a portal, what do you want to be able to show on your site during the regulation-drafting period?

5.    How should the SEC monitor the total CF investments an investor makes in a 12-month period?

6.    Is there a need for new SEC regulations to cover any secondary market that arises for crowdshares?

7.    Would you prefer (and why) the crowdfunding industry develop its own stand-alone self-regulatory organization (SRO), or should the Crowdfunding SRO be stood up as a new department of FINRA?

With this information, the NLCFA will be better informed as to the pressing concerns of its members regarding the SEC’s regulations. “This is just the start of months of heavy dialogue,” said Marlett. “And we want input from all sectors: VCs, portals, private investors, institutional brokerages, and certainly the hundreds of thousands of entrepreneurs who are chomping at the bit to get funding through crowdfunding.” In addition, the NLCFA is asking for members’ opinions regarding this year’s first annual National Crowdfunding Conference.

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David Marlett, JD CPA

Sara Hanks
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