Brooklyn Law Review


Dylan J. Hans


The Securities and Exchange Commission effectuated the final crowdfunding rules in 2016, and since then, those rules have become the target of scrutiny from startups and investors. Crowdfunding, a form of public capital raising, is an exciting means by which new companies raise money. But, how long will this regulation be a viable option for startups and small businesses? Will the regulation continue to create opportunities for small market enterprises to raise capital? This Note argues that the Securities and Exchange Commission must make adjustments to the Regulation Crowdfunding exemption to improve investor protection, while also reducing draconian disclosure requirements for small market issuers. Thus, this Note suggests ways in which the final rules can be amended to further improve the plight of startups and small businesses by adjusting the investment cap, investor limitations, and issuer advertisement restrictions. At the same time, the Note acknowledge potential concerns of fraud and the survival/success of intermediaries. Given the rapid success of Regulation Crowdfunding, the Securities and Exchange Commission expects the use of the regulation to grow. Therefore, the rules must be amended to facilitate market success and provide innovative ways to raise capital.