Course VI – Regulations, Disclosures and Regulatory Bodies

1: What is Title III of JOBS ACT?

Title III of the JOBS Act added new Securities Act Section 4(a) (6) that provides a federal exemption under section 5 of Securities Act of 1933, as amended. The new section permits a private company raise up to $1,070,000 in a 12-month period from both accredited and non-accredited investors. However, such exemptions are subject to specific requirements.

2: What is Regulation Crowdfunding?

Regulation Crowdfunding sets the rules that administer the offer and sale of securities under new Section 4(a)(6) of the Securities Act of 1933, as amended.

Regulation Crowdfunding also prescribes a framework for the regulation of registered funding portals and broker-dealers that issuers must use as intermediaries for the offer and sale of securities under Section 4(a)(6). Regulation Crowdfunding conditionally exempts securities sold pursuant to Section 4(a)(6) from the registration requirements of Section 12(g) of the Securities Exchange Act of 1934.

3: Define an Issuer

An Issuer in equity crowdfunding is a legal entity that proposes an offer to sell securities of its company through a registered funding portal or broker-dealer under Regulation Crowdfunding. Title III Crowdfunding is only available to issuers organized in the United States who are not subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. Registered investment companies, private equity funds, hedge funds, blank check companies, special purpose acquisition companies, and certain “bad actors” are prohibited issuers under Title III. regulations.

4: Scope of Disclosure

Companies looking to raise funds under the Regulation Crowdfunding are required to file a Form C with the SEC. Once approved, the offering materials are available to investors on the funding portal.

Below is the information that a company looking to raise funds through crowdfunding must disclose:

  • information about officers, directors, and owners of 20 percent or more of the issuer;
  • a description of the issuer’s business and the use of proceeds from the offering;
  • the price to the public of the securities or the method for determining the price,
  • the target offering amount and the deadline to reach the target offering amount,
  • whether the issuer will accept investments in excess of the target offering amount;
  • certain related-party transactions; and
  • a discussion of the issuer’s financial condition and financial statements.

5: What it means to be a registered crowdfunding intermediary?

A registered crowdfunding intermediary is a funding portal or a broker-dealer that is registered with SEC and recognized by FINRA. You can only invest in Regulation Crowdfunding offerings through a registered intermediary.

6: Funding Portal Compensation

Equifund CFP charges the following fees to issuers for the services it provides in connection with crowdfund offerings posted on the funding portal: 7% of the gross proceeds (total amount raised) of each offering payable in cash and 7% equity of the offering sold under section 4(a)(6).  All fees are payable at closing by the company from proceeds of the offering.

7: Promoter Compensation

Issuers may choose to work with a promoter or promoters to market their offering posted on Equifund CFP. Because this activity is on a case by case basis, each Issuer has a “disclosure” section on their offering page where promoters and their compensation whether past or prospective will be published.

8: Role and significance of SEC

The SEC is a federal agency in the United States Government. Its primary roles are to protect investors; maintain fair, orderly and efficient markets through the enforcement and proposing securities rules and regulations. The SEC’s Crowdfunding Investor bulletin can be found here;

9: Role and significance of FINRA

FINRA is an independent, not-for-profit organization authorized to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly. We encourage all Equifund CFP users to review FINRA’s investor resource center at

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