Lost In The Crowdfunding Framework

Law360, New York (February 27, 2012, 1:31 PM EST) -- The President is in favor of crowdfunding, and is “calling for a national framework that allows entrepreneurs and small businesses to raise capital through crowdfunding. (See the president’s proposal here). This is exciting news to crowdfunding enthusiasts. Crowdfunding would allow early-stage and small businesses to raise small amounts of money from the public at large.

Why Can’t Startups Use Crowdfunding Now?

Under current securities law, crowdfunding is not possible for a couple of different reasons.

First, Rule 506 of Regulation D, the securities law exemption most...
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