Massachusetts Intrastate Crowdfunding Now Legal

Emergency Crowdfunding Exemption Starts Immediately

First off, we would like to wish you all a happy and blessed Martin Luther King, Jr. Day.

massachusetts crowdfunding exemption As of last Thursday, January 15th, Massachusetts became the most recent state to adopt is own crowdfunding exemption. Secretary of the Commonwealth William F. Galvin released a statement revealing that the Securities Division of his office had adopted and approved these measures which would take effect immediately. So if you’re reading this in Massachusetts – equity crowdfunding is now legal in your state!

Here is Secretary of the Commonwealth Galvin on the exemption:

“This exemption will enable Massachusetts startups and entrepreneurs to more easily use the internet to raise capital which I hope will, in turn, give a boost to the Commonwealth’s economy and foster job growth here. And a carefully crafted regulation such as this offers protections for investors and companies using this new form of generating capital.”

For those familiar with Secretary Galvin, his actions and words may come as a surprise to you.  Nearly a year ago Secretary Galvin posted a derogatory comment letter regarding proposed regulations for the new Regulation A under Title IV of the JOBS Act of 2012. In Galvin’s letter he claimed he was “shocked” and “amazed” at some of the proposed regulations and made an adamant stance against it all. He has been quoted as saying “that the law was essentially opening the door for those with a history of defrauding investors.”

Something obviously changed his mind over the past year because Massachusetts entrepreneurs and investors are now the latest group to be privileged to intrastate crowdfunding. And to note, Massachusetts intrastate crowdfunding is very similar to the proposed federal rules. For example, individuals making $99K or less may invest $2,000 or up to 5% of their income or net worth, whichever is greater. Individuals making $100K or more may invest $100,000 or 10% of their income or net worth, whichever is greater. Particular types of investments, such as petroleum and mining, are excluded from the state exemption.

As for Massachusetts companies, issuers can raise up to $1 million in a 12 month period. If the company has audited financial statements, it has the benefit if raising up to $2 million which doubles what the the current federal guidelines allow. For the full details of the actual MASSACHUSETTS CROWDFUNDING EXEMPTION – 950 CMR 14.402(B)(13)(o) filed with the SEC, please follow this link: Massachusetts crowdfunding exemption.

Distinguished securities attorney Sam Guzik offered his opinion on the exemption in a recent Crowdfunding Insider article

“The Massachusetts Crowdfunding exemption is both noteworthy and a breath of fresh air, especially in view of footdragging by the SEC in JOBS Act rulemaking. I say noteworthy in view of its sam guzik crowdfundingsimplicity of terms – no requirement for a third party portal; the ability to raise up to $1 Million without audited financials.  Also noteworthy is that the exemption was issued without legislative action, using the existing power of the Secretary of State – and effective immediately on an emergency basis.  The SEC should take note!  So too should the new 114th Congress.

The only negative is courtesy of the SEC – since the state exemption is based on the Federal Rule 147 intrastate exemption, issuers and portals will not be allowed to use the internet to generally solicit – as the terms of the offering, according to the SEC, may only be viewed by persons first verified as state residents.”

Watching Massachusetts pass an emergency intrastate exemption and reading the positivity behind it adds more fuel to the Title III fire in 2015. Two weeks ago we published an intrastate crowdfunding update featuring Tennessee, Kentucky and Oregon and now with the snap of a finger Massachusetts has joined the movement as well. Here at truCrowd we are always excited to read news about a new state enacting its own intrastate crowdfunding laws. We look forward to an active and exciting 2015 and will keep you updated on all important Title III and intrastate equity crowdfunding news when it happens.

Thank you for reading and please leave your questions and comments below!

 

 

 

 

 

Posted in crowdfunding, Equity Crowdfunding, JOBS Act

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