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S.1791 - Democratizing Access to Capital Act of 2011
A bill to amend the securities laws to provide for registration exemptions for certain crowdfunded securities, and for other purposes.
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SECTION 1. SHORT TITLE.
SEC. 2. CROWDFUNDING EXEMPTION.
‘(6) subject to subsection (b), transactions involving the issuance of securities through a crowdfunding intermediary, whether or not the transaction involves a public offering, for which--CommentsClose CommentsPermalink
‘(A) the aggregate annual amount raised through the issue of the securities is $1,000,000 or less during any 12-month period, by any incorporated entity formed under and subject to the law of any State; andCommentsClose CommentsPermalink
‘(2) DISQUALIFICATION- Not later than 90 days after the date of enactment of this Act, the Commission shall, by rule or regulation, establish disqualification provisions under which a person shall not be eligible to utilize the exemption under subsection (a)(6), or to participate in the affairs of a crowdfunding intermediary facilitating the use of that exemption. Such provisions shall be substantially similar to the disqualification provisions contained in the regulations adopted in accordance with section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (
1512 U.S.C. 77dnote).CommentsClose CommentsPermalink
‘(3) RESTRICTED SECURITIES- Securities issued under a transaction described in subsection (a)(6) shall be considered restricted securities, subject to a one-year holding period.’.CommentsClose CommentsPermalink
SEC. 3. EXCLUSION OF CROWDFUNDING INVESTORS FROM SHAREHOLDER CAP.
SEC. 4. PREEMPTION OF STATE LAW.
SEC. 5. STATE FRAUD AUTHORITY.
SEC. 6. NOTICE FILINGS PERMITTED.
‘(E) FEES NOT PERMITTED ON CROWDFUNDED SECURITIES- Notwithstanding subparagraphs (A), (B), and (C), no filing or fee may be required with respect to any security that is a covered security pursuant to subsection (b)(4)(C), or will be such a covered security upon completion of the transaction, except for the securities commission (or any agency or office performing like functions) of the State of the issuer’s State of organization, or any State in which purchasers of 50 percent or greater of the aggregate amount of the issue are a residents.’.CommentsClose CommentsPermalink
SEC. 7. BROKER AND DEALER EXEMPTIONS.
‘(III) warns investors of the speculative nature generally applicable to investments in startups, emerging businesses, and small issuers, including risks in the secondary market related to illiquidity;CommentsClose CommentsPermalink
‘(VI) prohibits its employees from investing in the offerings made through the crowdfunding intermediary, or to have any financial interest in the companies posting offerings through the crowdfunding intermediary;CommentsClose CommentsPermalink
‘(aa) the crowdfunding intermediary’s physical address, website address, and the names of the crowdfunding intermediary and employees of the crowdfunding intermediary, keeping such information up-to-date; andCommentsClose CommentsPermalink
‘(X) requires the issuer to state a target offering amount and withhold capital formation proceeds until aggregate capital raised from investors other than the issuer is not less than 60 percent of the target offering amount;CommentsClose CommentsPermalink
‘(XV) defines and makes available the process for raising and resolving a complaint, including alternatives available to investors if the crowdfunding intermediary is unable to resolve a dispute to the satisfaction of the investor.’.CommentsClose CommentsPermalink
SEC. 8. CONFORMING AMENDMENTS.
(a) Securities Act of 1933- The Securities Act of 1933 (
(b) Securities Exchange Act of 1934- Section 28(f)(5)(E) of the Securities Exchange Act of 1934 (