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SEC Releases Rules for Crowdfunding Securities

Internet start-ups, independent studios, and any other company looking for investment capital can soon crowdfund their projects according to new rules released by the SEC.

The Securities and Exchange Commission Friday adopted rules allowing companies to offer securities via crowdfunding, subject to limits, both on the companies and on how much individuals can invest based on how money/assets they have.

"Crowdfunding is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects," the FCC pointed out.

“There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need,” said SEC Chair Mary Jo White, in a statement.

Congress created a federal exemption from securities laws to allow crowdfunding.

The rules allow individuals to invest, but with limits on how much, as well as on how much companies can raise through crowdfunding.

Companies will be able to raise up to $1 million in any 12-month period. Individuals with either an annual income or net worth under $100,000 will be limited to $2,000 per year in aggregate across all crowdfunding securities, or alternately, 5% of the lesser of their net worth or annual income.

Those whose combined net work and annual income is more than $100,000 will be limited to crowdfunding 10 percent of the lesser, up to a limit of $100,000 per year.

The rules won't become effective until 180 days after they are published in the Federal Register. Potential online securities funding "portals" can register for that status as of Jan. 29,2016.

To check out all the rules, go here:

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.