The Securities Exchange Commission (SEC) in the US has proposed new guidelines to allow companies to sell shares through crowdfunding websites.
The proposals come during the same week that the UK’s Financial Conduct Authority (FCA) issued a consultation paper asking for public input on crowdfunding regulation. The FCA wants to impose tighter controls on corwdfunding, a practice where companies – often start ups – raise investment through online channels.
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The chair of the SEC, Mary White, said: "There is a great deal of excitement in the marketplace about the crowdfunding exemption, and I’m pleased that we’re in a position to seek public comment on a proposal to permit crowdfunding."
"We want this market to thrive in a safe manner for investors."
The rules proposed by the SEC would allow investors to invest up to 5% of their annual income or up to a maximum of $100,000 and put a $1m cap on the funds a company can raise annually through crowdfunding.
They would also compel companies to disclose certain information to investors about their offers, and would mandate that securities bought through crowdfunding would have to be held for a year prior to reselling.
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By GlobalDataThe FCA, meanwhile, suggests that crowdfunding websites be subject to rules on how they promote themselves, ensuring that they target expert investors or wealthy individuals. Under the proposed regulations the FCA would require investors to either fit one of these categories or confirm that they were not investing more than 10% of their investable wealth to unlisted shares or debt securities.
Christopher Woolard, the Financial Conduct Authority’s (FCA) director of policy, risk and research, said: "Consumers need to be clear on what they’re getting into.
"Our rules provide this clarity and extra protection for consumers, balanced by a desire to ensure firms and individuals continue to have access to this innovative source of funding."
The FCA is asking for public input by 19 December 2013, while the SEC has given consumers 90 days from the 23 October to respond.
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