On Halloween eve, three years after authorization by the JOBS Act, the SEC finally adopted rules permitting small ventures and business startups to raise up to $1 million over a 12-month period by selling shares to the investing public through crowdfunding offerings conducted on Internet fundraising portals. Qualifying businesses and intermediary portals will be subject to procedural and reporting requirements. Investors will be restricted in the amount of shares they may purchase depending on whether their income or net worth is less or greater than $100,000. Shares issued in crowdfunding offerings will be subject to a one-year holding period, with limited (if any) secondary market. While many startups and investors are relieved that a regulatory framework now exists, the burdens of compliance may “spook many small businesses from pursuing crowdfunding” in the words of one SEC commissioner.

See the SEC’s crowdfunding press release for more information and a Fact Sheet summarizing the rules.