The Future of Intrastate CrowdFunding

CrowdFund Beat News Wire

This Report shows state activity with respect to allowing intra-state CrowdFunding.
It spans the gamut from enacting legislation, all the way to taking no action.
Some state assemblies are amending existing regulations, proposing new legislation, instituting administrative rules and actively considering what to do after the SEC rules are final. Specifically, the responses we received from state offices that regulate securities indicate the following:

1. Four states have amended or passed new regulations to cover CrowdFunding.

Georgia: The State Securities Division promulgated new rules known as the Invest Georgia Exemption (“IGE”).
Kansas: Office of the Securities Commissioner adopted new rules known as the Invest Kansas Exemption (“IKE”).
Michigan: The legislature passed and the Governor signed Public Act 264 allowing intra-state CrowdFunding.
Wisconsin: There is an existing exemption (approximately 20 years old) that can be used to regulate CrowdFunding.
2. Two states have amended their state blue sky laws to bring them into line with sections of the federal JOBS Act.

Arkansas passed an amendment to AR Code 23-42

Minnesota amended MN Statutes 80A.61—Section 406
3. One state decides the issue on a case-by-case basis and has authorized some offerings.

Idaho (for example, Treasure Valley Angel Fund LLC)
4. Five states have pending legislation.

Alabama State Senator Arthur Orr introduced a CrowdFunding bill at the request of the state Securities Division.
Maine has a bill (LD 1512) pending before the legislature to be taken up in 2014.
New Jersey Senate introduced a bill.
North Carolina’s Assembly has passed HB 680 permitting CrowdFunding by a vote of 103-1. The bill is currently in committee in the Senate and expected to pass in May 2014.
Pennsylvania has a bill (SB1045) that has been introduced to make a variety of changes to the state blue sky laws—including adding exemptions pertaining to funding portals. The bill is expected to be amended following promulgation of the SEC rules. To date, no action has
5. Two states are developing proposals.

South Carolina CrowdFunding advocates will propose legislation.
Texas House Speaker Joe Strauss called on the House Committee on Investments and Financial Services to “analyze the costs and benefits of implementing an intrastate equity crowd-funding system in Texas.”
6. Two states introduced legislation that did not pass.

Maryland’s bill (HB 1278) was introduced in the state legislature but no vote was taken during the last session.
Washington has had two bills (HB 2023 and HB 2054) introduced at the end of the past session. The regular session is over and the bills were not passed. Representative Habib introduced HB 2023 and his office indicated that they are working on the language of the bill and the Rep. Habib plans to reintroduce it in early 2014 when the next session begins. The legislative office of Representative Morris, who introduced HB 2054, said that he also plans to reintroduce HB 2054 in early 2014.
7. 26 states and the District of Columbia are waiting to see what final rules issued by the SEC will be. After examining the SEC rules, they will then determine if any state action is required. Of these 27 states, regulators in 8 states and the District of Columbia have indicated that there would probably be new state regulation or legislation once the SEC acts.

8. Four states simply said there were no new regulations or statutes passed or proposed and did not comment on the impact of the enactment by the SEC of its proposed rules.

9. Four states have not yet responded to our queries.

NOTE ON METHODOLOGY: We called the department in each state and the District of Columbia which is responsible for securities registration and oversight. Our initial questions were whether there were any existing or proposed legislation or regulations that would apply to CrowdFunding. If the answer was yes, we followed up with additional questions. If the answer was no, we asked if there were any under consideration with respect to CrowdFunding. Our team is currently doing additional follow-up and analysis. Each of the 4 states not responding was first contacted by phone. 2 requested us to follow up by email which we did. We are still awaiting replies from these. Of the remaining 2 we have left at least 3 messages with each and are continuing to try to reach them.

Mark Perlmutter
Host Of The “CrowdFunding World Summit”
Speakers Include U.S. Congress and 70 Global Experts

Office: 415-755-1142

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