Intrastate CrowdFunding Update

By Anthony Zeoli,  CrowdFunding Beat guest contributor, While the industry waits for Title III crowdfunding rules to be released, the intrastate crowdfunding movement continues to move forward (as a whole). Here is a brief update as to the status of the enactment/use of intrastate crowdfunding exemptions in certain states. US-Map-of-RE-Crowdfunding-States-May2014 (1)

STATE OF THE STATES: An Update On Intrastate Crowdfunding

While the industry waits for Title III crowdfunding rules to be released, the intrastate crowdfunding movement continues to move forward (as a whole). Here is a brief update as to the status of the enactment/use of intrastate crowdfunding exemptions in

TEXAS – Unlucky Number 13 As many of you know, Texas is primed to be (and most likely still will be) the 13th state to allow for intrastate crowdfunding. Texas was however, supposed to release their final intrastate crowdfunding rules early this month but that did not happen. Not being one to be left in the dark, I recently reached out to the Texas State Securities Board to find out what happened. Happily, I received some very helpful information from Marlene Sparkman, General Counsel, who said: “The State Securities Board meeting scheduled for August 28th was canceled. The meeting is likely to be rescheduled for early October and the outstanding proposals that relate to intrastate crowdfunding will be considered for adoption at that meeting. We anticipate filing the adopted rules with the Texas Register within 2 weeks after the meeting. Thereafter, the adoptions would be published in the Texas Register and would become effective approximately 20 days after that filing is made. You can view the intrastate crowdfunding proposals on our website under the May 9, 2014 entry.” There does not appear to be any material changes in the rules posted on the above referenced website from the “proposed rules” issued May 9, 2014. That being said, on the above referenced website there are some proposed crowdfunding administrative forms which were not available previously, including a an application for “Crowdfunding Portal Registration,” an application for “Crowdfunding Portal Withdrawal of Registration” and a form of “Crowdfunding Exemption Notice.” So from Ms. Sparkman’s response above, it looks like final rules are scheduled to be release by early November. One caveat however, is that I recently spoke to another member of the Texas State Securities Board as well who said that the meeting still has not been rescheduled. As a result, the release of the final rules may be delayed even further. NORTH CAROLINA – Where N.C. unfortunately stands for “No Crowdfunding” I am saddened to announce, for those of you that do not know, that unfortunately the proposed North Carolina intrastate crowdfunding act (the NC JOBS Act, originally HB680) is officially dead… at least for now. The proposed bill originally passed the North Carolina House by an almost unanimous vote (103 to 1) but failed to pass a Senate vote earlier this month (47-54 against). The belief is that bill failed in the Senate because legislators attempted to bundle the proposed intrastate crowdfunding exemption with certain other unrelated and unfavorable legislation. As noted on the exemption proposal website: “The The Senate leadership tried repeatedly to attach other more controversial legislation to the NC JOBS Act, and each of those attempts failed either in the Senate or when sent back to the House. The final attempt today was a bill entitled H1224, which bundled together 6 other provisions for sales taxes and corporate welfare along with the JOBS Act, and was also tied to two other bills that would provide amendments to H1224 if it was passed. A very contentious debate about the other provisions in the bill raged over the last week between the Senate and the House, in committees, and in the caucuses, with the ultimate result a final vote today of 47-54 against the bundled bill. This was the final bill to be considered by the legislature for the current session, which will adjourn tomorrow.” In preparing my proposed Illinois intrastate crowdfunding bill, I had several discussions with the team who put the North Carolina bill together, including Mark Easley and Michael O’Brien. I know how hard the individuals worked to get as far as they did and it is a shame to see those efforts wasted by short sighted politicians. Per Mr. O’Brien, the intent is to reintroduce the proposed intrastate crowdfunding as soon as possible and I can only hope that they have better luck when they do. Anthony J. Zeoli Ginsberg Jacobs LLC 300 South Wacker Drive, Suite 2750 Chicago Illinois 60606 Tel 312.660.2206     Fax 312.660.9612     Cell  773.983.9133

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