Monday, August 25, 2014

Washington Proposes Crowdfunding Rules

[This story previously appeared in Securities Regulation Daily.]

By Jay Fishman, J.D.

The Washington Department of Financial Institutions, Securities Division, has proposed crowdfunding rules for October 1 implementation so that issuers may claim the crowdfunding exemption under Washington’s Jobs Act of 2014.

Comments. Interested persons may submit written comments to Faith Anderson by mail to her attention at Securities Division, P.O. Box 9033, Olympia, WA 98507-9033; by fax to (360) 704-6480; or by email to Comments must be received by September 23, 2014.

Proposed crowdfunding rules. The proposed crowdfunding rules would do the following:

• define key terms;

• specify the types of issuers and offerings that may use the exemption;

• mandate the use of the Washington Crowdfunding Form as the disclosure document for offerings under the exemption;

• set forth the requirements for making an initial, amended or renewal exemption filing with the Securities Division;

• establish the escrow agreement requirements;

• specify the information to be included in quarterly reports;

• adopt investor protection measures such as bad actor disqualifications and investor cancellation rights;

• describe the optional role of “portals” in assisting with crowdfunding offerings;

• set forth recordkeeping requirements;

• mandate advertising filings;

• set filing fees;

• list the various crowdfunding offering restrictions under the Washington Jobs Act of 2014 and federal Securities Act, Section 3(a)(11)/SEC Rule 147; and

• establish other rules necessary to implement the crowdfunding exemption.