portals would be subject to the requirements of Regulation S-P under
the proposed regulation. In developing an estimate we have considered:
(1) The minimal recordkeeping burden imposed by Regulation S-P
(Regulation S-P has no recordkeeping requirement, and records relating
to customer communications already must be made and retained pursuant
to other Commission rules); (2) the summary fashion in which
information must be provided to investors in the privacy and opt-out
notices required by Regulation S-P (the model privacy form adopted by
the Commission and the other agencies in 2009, designed to serve as
both a privacy notice and an opt-out notice, is only two pages); and
(3) the availability of the model privacy form and online model privacy
form builder. Given these consideration and with the aid of our
institutional knowledge, we estimate that each funding portal would
spend, on an ongoing basis, an average of approximately 12 hours per
year complying with the information collection requirement of
Regulation S-P, for a total of approximately 600 annual burden-hours
(12 hours/respondent x 50 funding portals).
    Regulation S-AM would require funding portals to provide a notice
to each affected individual informing the individual of his or her
right to prohibit such marketing before a receiving affiliate may make
marketing solicitations based on the communication of certain consumer
financial information from the broker. Based on the discussion with
industry participants, we estimate that approximately 20 funding
portals would have affiliations that would subject them to the
requirements of Regulation S-AM under the proposed regulation, and that
they would require an average one-time burden of 1 hour to review
affiliate marketing practices, for a total of 20 hours (1 hour/
respondent x 20 funding portals). We also estimate that these 20
funding portals would be required to provide notice and opt-out
opportunities to consumers pursuant to the requirements of Regulation
S-AM and that they would incur an average first-year burden of 18 hours
in doing so, for a total estimated first-year burden of 360 hours (18
hours/respondent x 20 funding portals). We estimate that funding
portals would incur a continuing ongoing burden related to the
requirements of Regulation S-AM to provide notice and opt-out
opportunities of approximately 4 hours per respondent per year to
create and deliver notices to new investors and record any opt-outs
that are received on an ongoing basis, for a total of approximately 80
annual burden-hours (4 hours/respondent x 20 funding portals).\1103\
---------------------------------------------------------------------------

    \1103\ The average (blended) annual time burden per respondent
for Regulation S-AM requirements would be 10 hours ((18 hours in the
first year/3 years) + 4 hours/year continuing burden = 10 hours per
year).
---------------------------------------------------------------------------

    Under our proposed rules, Regulation S-ID generally would require
funding portals to develop and implement a written identity theft
prevention program that is designed to detect, prevent and mitigate
identity theft in connection with certain existing accounts or the
opening of new accounts. Based on our institutional knowledge, we
estimate that the initial burden for funding portals to comply with the
applicable portions of proposed Regulation S-ID would be (1) 25 hours
to develop and obtain board approval of a program; (2) 4 hours to train
staff; and (3) 2 hours to conduct an initial assessment of relevant
accounts, for a total of 31 hours. We estimate that all 50 funding
portals would incur these initial time burdens, resulting in an
aggregate time burden of 1,550 hours ((25 + 4 + 2 hours/respondent) x
50 funding portals).
    With respect to the requirements of Regulation S-ID, we estimate
that the ongoing burden per year would include: (1) 2 hours to
periodically review and update the program, review and preserve
contracts with service providers and review and preserve any
documentation received from service providers; (2) 4 hours to prepare
and present an annual report to a compliance director; and (3) 2 hours
to conduct periodic assessments to determine if the entity offers or
maintains covered accounts, for a total of 8 hours, of which we
estimate 7 hours would be spent by internal counsel and 1 hour would be
spent by a compliance director. We estimate that 50 funding portals
would incur these ongoing time burdens, making the total ongoing burden
400 hours (8 hours/respondent x 50 funding portals).
ii. Cost
    We estimate that, for PRA purposes, there is no cost associated
with the requirements of Regulation S-P, Regulation S-AM or Regulation
S-ID.
n. Records To Be Made and Kept by Funding Portals
i. Time Burden
    All funding portals would be required to make and keep records
related to their activities to facilitate transactions in reliance on
Section 4(a)(6) and the related rules. These proposed books and records
requirements are based generally on Exchange Act Rules 17a-3 and 17a-4,
which apply to broker-dealers. To estimate the initial burden for
funding portals, we examined the current annual burdens of Rules 17a-3
and 17a-4.\1104\
---------------------------------------------------------------------------

    \1104\ See Collections of Information for Exchange Act Rules
17a-3 and 17a-4 (OMB Control Nos. 3235-0033 and 3235-0279), Office
of Information and Regulatory Affairs, Office of Management and
Budget, available at http://www.reginfo.gov/public/do/PRAMain.

---------------------------------------------------------------------------

    The most recently approved annual recordkeeping burden for broker-
dealer compliance with Rule 17a-3 is currently estimated at 394.16
hours per respondent, and the most recently approved annual
recordkeeping burden for broker-dealer compliance with Rule 17a-4 is
currently estimated at 254 hours per respondent.
    Given the more limited scope of a funding portal's business as
compared to that of a broker, the more limited scope of the proposed
books and records rules, and the fact that funding portals would make,
deliver and store records electronically (as required), we expect the
burden of the proposed rules may be less than that of Rules 17a-3 and
17a-4. For the purposes of the PRA, we assume that the recordkeeping
burden, on average, for a funding portal to comply with the proposed
rules would be 50% of the burdens of a broker-dealer to comply with
Rules 17a-3 and 17a-4 (although 50% may turn out to be a high
estimate). We expect the ongoing recordkeeping burden for funding
portals would be the same as the initial burden because maintaining
such records would be consistent each year. Therefore, we estimate the
initial burden to be approximately 325 hours per respondent,\1105\ or
16,250 hours total (325 hours/respondent x 50 respondents = 16,250
hours). We estimate that the ongoing recordkeeping burden for funding
portals would be approximately 325 hours per respondent, or 16,250
hours total (325 hours/respondent x 50 funding portals).
---------------------------------------------------------------------------

    \1105\ 394.16 hours (recordkeeping burden for Rule 17a-3) + 254
hours (recordkeeping burden for Rule 17a-4) = 648.16 hours. 648.16
hours/2 = 324.08 hours.
---------------------------------------------------------------------------

ii. Cost
    For purposes of the PRA, we assume that a funding portal's initial
recordkeeping cost associated with making and keeping records by a
funding portal would not be significantly different from the ongoing
recordkeeping cost because maintaining such records would be consistent
each year. The most recently approved annual recordkeeping cost for
broker-dealer compliance with Rule 17a-3 is currently estimated at
$5,706.67 per respondent. These ongoing recordkeeping costs reflect the
costs of systems and equipment development. The most recently approved
annual recordkeeping cost for broker-dealer compliance with Rule 17a-4
is currently estimated at $5,000 per respondent.
    Given the more limited scope of a funding portal's business as
compared to that of a broker, the more limited scope of the proposed
books and records rules, and the fact that funding portals would make,
deliver (as required) and store records electronically, we expect the
annual recordkeeping cost of the proposed rule requirements may be less
than that of Rules 17a-3 and 17a-4. For purposes of the PRA, we assume
that the annual recordkeeping cost on average for a funding portal to
comply with the proposed requirements that records be made and kept
would be about 50% less than burdens of a broker-dealer to comply with
Rules 17a-3 and 17a-4. We expect the initial recordkeeping cost for
funding portals, therefore, to be approximately $5,350 per
respondent,\1106\ or $267,500 total ($5,350 per respondent x 50
respondents = $267,500).
---------------------------------------------------------------------------

    \1106\ $5,706.673 (recordkeeping cost for Rule 17a-3) + $5,000
(recordkeeping cost for Rule 17a-4) = $10,706.673 multiplied by 50%.
---------------------------------------------------------------------------

    We also estimate that the ongoing recordkeeping cost for funding
portals would be approximately $5,350 per respondent, or $267,500 total
($5,350 per respondent x 50 respondents = $267,500).

D. Collections of Information Are Mandatory

    The collections of information required under proposed Rules 201
through 203 would be mandatory for all issuers. The collections of
information required under proposed Rules 300 through 304 would be
mandatory for all intermediaries. The collections of information
required under proposed Rules 400 through 404 would be mandatory for
all funding portals.

E. Confidentiality

    Responses on Form C, Form C-A, Form C-U, Form C-AR and Form C-TR
would not be confidential. Responses on Form ID would be kept
confidential by the Commission, subject to a request under the Freedom
of Information Act.\1107\ Responses on Form Funding Portal would not be
confidential.
---------------------------------------------------------------------------

    \1107\ 5 U.S.C. 552. The Commission's regulations that implement
the Freedom of Information Act are at 17 CFR 200.80 et seq.
---------------------------------------------------------------------------

F. Retention Period of Recordkeeping Requirements

    Issuers are not subject to recordkeeping requirements under
proposed Regulation Crowdfunding. Intermediaries that are brokers would
be required to retain records and information relating to proposed
Regulation Crowdfunding for the required retention periods specified in
Exchange Act Rule 17a-4.\1108\ Intermediaries that are funding portals
would be required to retain records and information under proposed
Regulation Crowdfunding for the required retention periods specified in
proposed Rule 404.\1109\
---------------------------------------------------------------------------

    \1108\ 17 CFR 240.17a-4.
    \1109\ See proposed Rule 404 of Regulation Crowdfunding.
---------------------------------------------------------------------------

G. Request for Comment

    The Commission invites comment on all of the above estimates. In
particular, the Commission requests comment on the assumptions and
estimates described above with respect to how issuers and
intermediaries, especially funding portals, would comply with the
proposed information collection requests. Pursuant to 44 U.S.C.
3506(c)(2)(A), the Commission requests comment in order to: (1)
Evaluate whether the proposed collections of information are necessary
for the proper performance of our functions, including whether the
information would have practical utility; (2) evaluate the accuracy of
our estimate of the burden of the proposed collections of information;
(3) determine whether there are ways to enhance the quality, utility
and clarity of the information to be collected; and (4) evaluate
whether there are ways to minimize the burden of the proposed
collections of information on those who respond, including through the
use of automated collection techniques or other forms of information
technology.
    Persons submitting comments on the proposed collection of
information requirements should direct their comments to the Office of
Management and Budget, Attention: Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and should also send a copy of their comments to
Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100
F Street NE., Washington, DC 20549-1090, with reference to File No. S7-
09-13. Requests for materials submitted to OMB by the Commission, with
regard to these collections of information, should be in writing, with
reference to File No. S7-09-13, and they should be submitted to the
Securities and Exchange Commission, Office of FOIA Services, 100 F
Street NE., Washington, DC 20549-2736. As OMB is required to make a
decision concerning the collections of information between 30 and 60
days after publication, a comment to OMB is best assured of having its
full effect if OMB receives it within 30 days of publication.

V. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\1110\ the Commission must advise the OMB as
to whether the proposed rules constitute a ``major'' rule. Under
SBREFA, a rule is considered ``major'' when, if adopted, it results or
is likely to result in: (1) An annual effect on the economy of $100
million or more (either in the form of an increase or a decrease); (2)
a major increase in costs or prices for consumers or individual
industries; or (3) significant adverse effect on competition,
investment or innovation. If a rule is ``major,'' its effectiveness
will generally be delayed for 60 days pending Congressional review.
---------------------------------------------------------------------------

    \1110\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996)
(codified in various Sections of 5 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
---------------------------------------------------------------------------

    The Commission requests comment on the potential impact of the
proposed rules on the economy on an annual basis, any potential
increase in costs or prices for consumers or individual industries and
any potential effect on competition, investment or innovation.
Commenters are requested to provide empirical data and other factual
support for their view to the extent possible.

VI. Initial Regulatory Flexibility Act Analysis

    The Commission has prepared the following Initial Regulatory
Flexibility Analysis (``IRFA''), in accordance with the provisions of
the Regulatory Flexibility Act,\1111\ regarding proposed Regulation
Crowdfunding.
---------------------------------------------------------------------------

    \1111\ 5 U.S.C. 603.
---------------------------------------------------------------------------

A. Reasons for the Proposed Actions

    The proposed regulation is designed to implement the requirements
of Title III. Title III added Securities Act Section 4(a)(6), which
provides a new exemption from the registration requirements of
Securities Act Section 5 for crowdfunding transactions, provided the
transactions are conducted in the manner set forth in new Securities
Act Section 4A. Section 4A includes requirements for issuers that offer
or sell securities in reliance on the crowdfunding exemption, as well
as for persons acting as intermediaries in those transactions. The
proposed rules prescribe requirements governing the offer and sale of
securities in reliance on Section 4(a)(6), and provide a framework for
the regulation of registered funding portals and brokers that act as
intermediaries in the offer and sale of securities in reliance on
Section 4(a)(6).

B. Objectives

    As discussed above, the crowdfunding provisions of the JOBS Act,
which we would implement through this proposed regulation, were
designed to help alleviate the funding gap and accompanying regulatory
concerns faced by small businesses by making relatively low dollar
offerings of securities less costly and by providing crowdfunding
platforms a means by which to facilitate the offer and sale of
securities without registering as brokers, with a framework for
regulatory oversight to protect investors.

C. Small Entities Subject to the Proposed Rules

    For purposes of the Regulatory Flexibility Act, under our rules, an
issuer (other than an investment company) is a ``small business'' or
``small organization'' if it has total assets of $5 million or less as
of the end of its most recent fiscal year and is engaged or proposing
to engage in an offering of securities which does not exceed $5
million.\1112\ We believe that many issuers seeking to offer and sell
securities in reliance on Section 4(a)(6) would be at a very early
stage of their business development and would likely have total assets
of $5 million or less. Also, to qualify for the exemption under Section
4(a)(6), the amount raised by an issuer must not exceed $1 million in a
12-month period. Therefore, we estimate that all issuers who offer or
sell securities in reliance on the exemption would be classified as a
``small business'' or ``small organization.''
---------------------------------------------------------------------------

    \1112\ 17 CFR 230.157.
---------------------------------------------------------------------------

    Paragraph (a) of Rule 0-10 under the Exchange Act provides that,
for purposes of the Regulatory Flexibility Act, ``[w]hen used with
reference to a broker or dealer, the Commission has defined the term
``small entity'' to mean a broker or dealer (``small broker-dealer''
that: (1) Had total capital (net worth plus subordinated liabilities of
less than $500,000 on the date in the prior fiscal year as of which its
audited financial statements were prepared pursuant to Rule 17a-5(d)
or, if not required to file such statements, a broker or dealer that
had total capital (net worth plus subordinated debt) of less than
$500,000 on the last business day of the preceding fiscal year (or in
the time that it has been in business if shorter); and (2) is not
affiliated with any person (other than a natural person) that is not a
small business or small organization as defined in this release.''
\1113\ Currently, based on FOCUS Report \1114\ data, there are 871
broker-dealers that are classified as ``small'' entities for purposes
of the Regulatory Flexibility Act.\1115\ We apply comparable criteria
to funding portals that would register under the proposed regulation.
Based on discussions with industry participants, we estimate that, of
the anticipated 50 funding portals we expect to register under the
proposed regulation, 30 would be classified as ``small'' entities for
purposes of the Regulatory Flexibility Act.
---------------------------------------------------------------------------

    \1113\ 17 CFR 240.0-10(c).
    \1114\ FOCUS Reports, or ``Financial and Operational Combined
Uniform Single'' Reports, are monthly, quarterly, and annual reports
that broker-dealers generally are required to file with the
Commission and/or self-regulatory organizations pursuant to Exchange
Act Rule 17a-5 (17 CFR 240.17a-5).
    \1115\ See 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping and other Compliance Requirements

    As discussed above, the proposed regulation includes reporting,
recordkeeping and other compliance requirements. In particular, the
proposed regulation would impose certain disclosure requirements on
issuers offering and selling securities in a transaction relying on the
exemption provided by Section 4(a)(6). The proposed rules would require
that issuers relying on the exemption provided by Section 4(a)(6) file
with the Commission certain specified information about the issuer and
the offering, including information about the issuer's contact
information; directors, officers and certain beneficial owners;
business and business plan; current number of employees; financial
condition; target offering amount and the deadline to reach the target
offering amount; use of proceeds from the offering and price or method
for calculating the price of the securities being offered; ownership
and capital structure; material factors that make an investment in the
issuer speculative or risky; indebtedness; description of other
offerings of securities; and transactions with related parties. Issuers
also would be required to file updates with the Commission to describe
the progress of the issuer in meeting the target offering amount. Any
issuer that sold securities in reliance on Section 4(a)(6) also would
be required to file annually with the Commission an annual report to
update the previously provided disclosure about the issuer's contact
information; directors, officers and certain beneficial owners;
business and business plan; current number of employees; financial
condition; ownership and capital structure; material factors that make
an investment in the issuer speculative or

risky; indebtedness; description of other offerings of securities; and
transactions with related parties.
    Intermediaries would be required to register with the Commission as
either brokers or as funding portals pursuant to the proposed rules.
Intermediaries also would be required to provide quarterly reports to
the Commission. Funding portals would be required to make and keep
certain records in accordance with the proposed rules. In addition, the
proposed rules would impose specific compliance requirements on
intermediaries.
    In proposing this regulation, the Commission took into account that
the regulation, as mandated in the JOBS Act, aimed to address
difficulties encountered by issuers that are small entities.
Accordingly, the Commission designed the proposed rules for
intermediaries, to the extent possible, for small entities. We believe
that the potential impact of the proposed regulation on larger brokers
and funding portals would be less than on small brokers and small
intermediaries. We believe that the reporting, recordkeeping and other
compliance requirements of the proposed regulation applicable to
intermediaries would impact, in particular, small entities that decide
to register as funding portals. We believe that most of these
requirements would be performed by internal compliance personnel of the
broker or funding portal, but we estimate that at least one-third of
funding portals may decide to hire outside counsel and third-party
service providers to assist in meeting the compliance requirements. For
example, a funding portal may decide to hire a third party to maintain
records required by the proposed rules.

E. Duplicative, Overlapping or Conflicting Federal Rules

    The Commission believes that there are no federal rules that
duplicate, overlap or conflict with the proposed regulation or the
proposed amendment to Rule 30-1 of our Rules of Organization and
Program Management.

F. Significant Alternatives

    Pursuant to Section 3(a) of the Regulatory Flexibility Act,\1116\
the Commission must consider certain types of alternatives, including:
(1) The establishment of differing compliance or reporting requirements
or timetables that take into account the resources available to small
entities; (2) the clarification, consolidation or simplification of
compliance and reporting requirements under the rule for small
entities; (3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rule, or any part of the rule,
for small entities.
---------------------------------------------------------------------------

    \1116\ 5 U.S.C. 603(c).
---------------------------------------------------------------------------

1. Issuers
    The Commission considered whether it is necessary or appropriate to
establish different compliance or reporting requirements or timetables
or to clarify, consolidate or simplify compliance and reporting
requirements under the proposed rules for small issuers. With respect
to using performance rather than design standards, the Commission used
performance standards to the extent appropriate under the statute. For
example, issuers have the flexibility to customize the presentation of
certain disclosures in their offering statements.\1117\ The Commission
also considered whether there should be an exemption from coverage of
the rule, or any part of the rule, for small issuers. However, because
the proposed rules have been designed in the context of crowdfunding,
which focuses on the needs of issuers that are small entities, the
Commission believes that small issuers should be covered by the
proposed rules. The Commission does not believe it would be necessary
to establish different compliance requirements for small issuers.
Having inconsistent requirements could undermine the objectives of the
proposed rules.
---------------------------------------------------------------------------

    \1117\ See Section II.B.3 above.
---------------------------------------------------------------------------

2. Intermediaries
    The Commission also considered whether, for small brokers or small
funding portals, it is appropriate to establish different compliance,
reporting or timing requirements, or whether to clarify, consolidate or
simplify those requirements in our proposed rules. While the proposed
rules are based in large part on existing compliance requirements
applicable to registered brokers, the Commission believes that it would
not be necessary to establish different requirements for small entities
(whether brokers or funding portals) that engage in crowdfunding. The
proposed rules have been tailored to the limited role intermediaries
would play in offerings made pursuant to Section 4(a)(6) (as compared
to the wide range of services that a traditional broker-dealer may
provide). Therefore, we believe that the proposed rules are
appropriate, and properly cover all brokers and funding portals. The
Commission believes that having separate requirements for small
entities (whether brokers or funding portals) could undermine the
objectives of the proposed requirements, and could lead to less
regulatory clarity.

G. Request for Comment

    The Commission encourages written comments on matters discussed in
this IRFA. In particular, the Commission seeks comment on the number of
small entities that would be affected by the proposed rules and whether
the effect on small entities would be economically significant.
Commenters are asked to describe the nature of any effect and to
provide empirical data to support their views.

VII. Statutory Authority and Text of Proposed Regulation

    We are proposing the rules and forms contained in this document
under the authority set forth in the Securities Act, particularly,
Sections 4(a)(6), 4A and 19 thereof, 15 U.S.C. 77a et seq., the
Exchange Act, particularly, Sections 3(b), 3(h), 10(b), 15, 17, 23(a)
and 36 thereof, 15 U.S.C. 78a et seq., and Public Law 112-106, Sec.
301-305, 126 Stat. 306 (2012).

List of Subjects

17 CFR Part 200

    Administrative practice and procedure, Authority delegations
(Government agencies), Organization and functions (Government
agencies), Reporting and recordkeeping requirements.

17 CFR Part 227

    Crowdfunding, Funding portals, Intermediaries, Reporting and
recordkeeping requirements, Securities.

17 CFR Parts 232 and 239

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 240

    Brokers, Confidential business information, Fraud, Reporting and
recordkeeping requirements, Securities.

17 CFR Part 249

    Brokers, Reporting and recordkeeping requirements, Securities.

    In accordance with the foregoing, we propose to amend Title 17,
Chapter II of the Code of Federal Regulations as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
REQUESTS

Subpart A--Organization and Program Management

0
1. The authority citation for part 200, subpart A, continues to read,
in part as follows:

    Authority:  15 U.S.C. 77o, 77s, 77sss, 78d, 78d-1, 78d-2, 78w,
78ll(d), 78mm, 80a-37, 80b-11, 7202, and 7211 et seq., unless
otherwise noted.
* * * * *
0
2. Amend Sec.  200.30-1 by:
0
a. Redesignating paragraphs (d), (e), (f), (g), (h), (i), (j) and (k)
as paragraphs (e), (f), (g), (h), (i), (j), (k) and (l), respectively;
and
0
b. Adding new paragraph (d).
    The addition reads as follows:

Sec.  200.30-1  Delegation of authority to Director of Division of
Corporation Finance.

* * * * *
    (d) With respect to the Securities Act of 1933 (15 U.S.C. 77a et
seq.) and Regulation Crowdfunding thereunder (Sec. Sec.  227.100
through 227.503 of this chapter), to authorize the granting of
applications under Sec.  227.503(b)(2) of this chapter upon the showing
of good cause that it is not necessary under the circumstances that the
exemption under Regulation Crowdfunding be denied.
* * * * *
0
3. Part 227 is added to read as follows:

PART 227--REGULATION CROWDFUNDING, GENERAL RULES AND REGULATIONS

Sec.
Subpart A--General
227.100 Crowdfunding exemption and requirements.
Subpart B--Requirements for Issuers
227.201 Disclosure requirements.
227.202 Ongoing reporting requirements.
227.203 Filing requirements and form.
227.204 Advertising.
227.205 Promoter compensation.
Subpart C--Requirements for Intermediaries
227.300 Intermediaries.
227.301 Measures to reduce risk of fraud.
227.302 Account opening.
227.303 Requirements with respect to transactions.
227.304 Completion of offerings, cancellations and reconfirmations.
227.305 Payments to third parties.
Subpart D--Funding Portal Regulation
227.400 Registration of funding portals.
227.401 Exemption.
227.402 Conditional safe harbor.
227.403 Compliance.
227.404 Records to be made and kept by funding portals.
Subpart E--Miscellaneous Provisions
227.501 Restrictions on resales.
227.502 Insignificant deviations from a term, condition or
requirement of Regulation Crowdfunding.
227.503 Disqualification.

    Authority:  15 U.S.C. 77d, 77d-1, 77s, 78c, 78o, 78q, 78w, 78mm,
and Pub. L. 112-106, Sec.  301-305, 126 Stat. 306 (2012), unless
otherwise noted.

Subpart A--General

Sec.  227.100  Crowdfunding exemption and requirements.

    (a) Exemption. An issuer may offer and sell securities in reliance
on Section 4(a)(6) of the Securities Act of 1933 (the ``Securities
Act'') (15 U.S.C. 77d(a)(6)), provided that:
    (1) The aggregate amount of securities sold to all investors by the
issuer in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) during the 12-month period preceding the date of such offer
or sale, including the securities offered in such transaction, shall
not exceed $1,000,000;
    (2) The aggregate amount of securities sold to any investor by any
issuer in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) during the 12-month period preceding the date of such
transaction, including the securities sold to such investor in such
transaction, shall not exceed the greater of:
    (i) $2,000 or 5 percent of annual income or net worth of the
investor, whichever is greater, if both the annual income and net worth
are less than $100,000; and
    (ii) 10 percent of annual income or net worth of the investor,
whichever is greater, not to exceed an amount sold of $100,000, if
either the annual income or net worth of the investor is equal to or
more than $100,000;
    Instruction 1 to paragraph (a)(2). To determine the investment
limit for a natural person, the person's annual income and net worth
shall be calculated as those values are calculated for purposes of
determining accredited investor status in accordance with 17 CFR
230.501.
    Instruction 2 to paragraph (a)(2). The person's annual income and
net worth may be calculated jointly with the annual income and net
worth of the person's spouse.
    Instruction 3 to paragraph (a)(2). An issuer offering and selling
securities in reliance on Section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)) may rely on the efforts an intermediary is required
to undertake pursuant to Sec.  227.303(b) to ensure that the aggregate
amount of securities purchased by an investor in offerings pursuant to
Section 4(a)(6) of the Securities Act will not cause the investor to
exceed the limit set forth in Section 4(a)(6) of the Securities Act and
Sec.  227.100(a)(2), provided that the issuer does not know that the
investor had exceeded the investor limits or would exceed the investor
limits as a result of purchasing securities in the issuer's offering.
    (3) The transaction is conducted through an intermediary that
complies with the requirements in Section 4A(a) of the Securities Act
(15 U.S.C. 77d-1(a)) and the related requirements in Regulation
Crowdfunding (Sec. Sec.  227.100 et seq.), and the transaction is
conducted exclusively through the intermediary's platform; and
    Instruction 1 to paragraph (a)(3). An issuer shall not conduct an
offering or concurrent offerings in reliance on Section 4(a)(6) of the
Securities Act of 1933 (15 U.S.C. 77d(a)(6)) using more than one
intermediary.
    Instruction 2 to paragraph (a)(3). An intermediary through which a
crowdfunding transaction is conducted may engage in back office or
other administrative functions other than on the intermediary's
platform.
    (4) The issuer complies with the requirements in Section 4A(b) of
the Securities Act (15 U.S.C. 77d-1(b)) and the related requirements in
this part.
    (b) Applicability. The crowdfunding exemption shall not apply to
transactions involving the offer or sale of securities by any issuer
that:
    (1) Is not organized under, and subject to, the laws of a State or
territory of the United States or the District of Columbia;
    (2) Is subject to the requirement to file reports pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
``Exchange Act'') (15 U.S.C. 78m or 78o(d));
    (3) Is an investment company, as defined in Section 3 of the
Investment Company Act of 1940 (15 U.S.C. 80a-3), or is excluded from
the definition of investment company by Section 3(b) or Section 3(c) of
that Act (15 U.S.C. 80a-3(b) or 80a-3(c));
    (4) Is not eligible to offer or sell securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) as a result
of a disqualification as specified in Sec.  227.503(a);
    (5) Has sold securities in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) and has not filed with the
Commission and provided to investors, to the extent required, the
ongoing annual reports required by this

part during the two years immediately preceding the filing of the
required offering statement; or
    (6) Has no specific business plan or has indicated that its
business plan is to engage in a merger or acquisition with an
unidentified company or companies.
    (c) Issuer. For purposes of this part, issuer includes all entities
controlled by or under common control with the issuer. It also includes
any predecessor of the issuer.
    Instruction to paragraph (c). An entity is controlled by or under
common control with the issuer if the issuer possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of the entity, whether through the ownership of
voting securities, by contract or otherwise.
    (d) Platform. For purposes of this part, platform means an Internet
Web site or other similar electronic medium through which a registered
broker or a registered funding portal acts as an intermediary in a
transaction involving the offer or sale of securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)).

Subpart B--Requirements for Issuers

Sec.  227.201  Disclosure requirements.

    An issuer offering or selling securities in reliance on Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) and in accordance
with Section 4A of the Securities Act (15 U.S.C. 77d-1) and this part
must file with the Commission on the Electronic Data Gathering,
Analysis, and Retrieval system (EDGAR), provide to investors and the
relevant intermediary, and make available to potential investors the
following information:
    (a) The name, legal status (including its form of organization,
jurisdiction in which it is organized and date of organization),
physical address and Web site of the issuer;
    (b) The names of the directors and officers (and any persons
occupying a similar status or performing a similar function) of the
issuer, all positions and offices with the issuer held by such persons,
the period of time in which such persons served in the position or
office and their business experience during the past three years,
including:
    (1) Each person's principal occupation and employment, including
whether any officer is employed by another employer; and
    (2) The name and principal business of any corporation or other
organization in which such occupation and employment took place.
    Instruction to paragraph (b). For purposes of this paragraph (b),
the term officer means a president, vice president, secretary,
treasurer or principal financial officer, comptroller or principal
accounting officer, and any person routinely performing corresponding
functions with respect to any organization, whether incorporated or
unincorporated.
    (c) The name of each person, as of the most recent practicable
date, who is a beneficial owner of 20 percent or more of the issuer's
outstanding voting equity securities, calculated on the basis of voting
power;
    (d) A description of the business of the issuer and the anticipated
business plan of the issuer;
    (e) The current number of employees of the issuer;
    (f) A discussion of the material factors that make an investment in
the issuer speculative or risky;
    (g) The target offering amount and the deadline to reach the target
offering amount, including a statement that if the sum of the
investment commitments does not equal or exceed the target offering
amount at the offering deadline, no securities will be sold in the
offering, investment commitments will be cancelled and committed funds
will be returned;
    (h) Whether the issuer will accept investments in excess of the
target offering amount and, if so, the maximum amount that the issuer
will accept and whether oversubscriptions will be allocated on a pro-
rata, first come-first served, or other basis;
    (i) A description of the purpose and intended use of the offering
proceeds;
    Instruction to paragraph (i). An issuer must identify any intended
use of proceeds and provide a reasonably detailed description of such
intended use, such that investors are provided with an adequate amount
of information to understand how the offering proceeds will be used. If
an issuer has identified a range of possible uses, the issuer should
identify and describe each probable use and the factors impacting the
selection of each particular use. If the issuer will accept proceeds in
excess of the target offering amount, the issuer must describe the
stated purpose and intended use of the excess proceeds with similar
specificity.
    (j) A description of the process to complete the transaction or
cancel an investment commitment, including a statement that:
    (1) Investors may cancel an investment commitment until 48 hours
prior to the deadline identified in the issuer's offering materials;
    (2) The intermediary will notify investors when the target offering
amount has been met;
    (3) If an issuer reaches the target offering amount prior to the
deadline identified in its offering materials, it may close the
offering early if it provides notice about the new offering deadline at
least five business days prior to such new offering deadline (absent a
material change that would require an extension of the offering and
reconfirmation of the investment commitment); and
    (4) If an investor does not cancel an investment commitment before
the 48-hour period prior to the offering deadline, the funds will be
released to the issuer upon closing of the offering and the investor
will receive securities in exchange for his or her investment;
    (k) A statement that if an investor does not reconfirm his or her
investment commitment after a material change is made to the offering,
the investor's investment commitment will be cancelled and the
committed funds will be returned;
    (l) The price to the public of the securities or the method for
determining the price, provided that, prior to any sale of securities,
each investor shall be provided in writing the final price and all
required disclosures;
    (m) A description of the ownership and capital structure of the
issuer, including:
    (1) The terms of the securities being offered and each other class
of security of the issuer, including the number of securities being
offered and/or outstanding, whether or not such securities have voting
rights, any limitations on such voting rights, how the terms of the
securities being offered may be modified and a summary of the
differences between such securities and each other class of security of
the issuer, and how the rights of the securities being offered may be
materially limited, diluted or qualified by the rights of any other
class of security of the issuer;
    (2) A description of how the exercise of the rights held by the
principal shareholders of the issuer could affect the purchasers of the
securities being offered;
    (3) The name and ownership level of each person, as of the most
recent practicable date, who is the beneficial owner of 20 percent or
more of the issuer's outstanding voting equity securities, calculated
on the basis of voting power;
    (4) How the securities being offered are being valued, and examples
of methods for how such securities may be valued by the issuer in the
future,

including during subsequent corporate actions;
    (5) The risks to purchasers of the securities relating to minority
ownership in the issuer and the risks associated with corporate actions
including additional issuances of securities, issuer repurchases of
securities, a sale of the issuer or of assets of the issuer or
transactions with related parties; and
    (6) A description of the restrictions on transfer of the
securities, as set forth in Sec.  227.501;
    (n) The name, Commission file number and Central Registration
Depository (CRD) number (as applicable) of the intermediary through
which the offering is being conducted;
    (o) The amount of compensation paid to the intermediary for
conducting the offering, including the amount of referral and any other
fees associated with the offering;
    (p) A description of the material terms of any indebtedness of the
issuer, including the amount, interest rate, maturity date and any
other material terms;
    (q) A description of exempt offerings conducted within the past
three years;
    Instruction to paragraph (q). In providing a description of any
prior exempt offerings, disclose:
    (1) The date of the offering;
    (2) The offering exemption relied upon;
    (3) The type of securities offered; and
    (4) The amount of securities sold and the use of proceeds.
    (r) A description of any transaction since the beginning of the
issuer's last full fiscal year, or any currently proposed transaction,
to which the issuer or any entities controlled by or under common
control with the issuer was or is to be a party and the amount involved
exceeds five percent of the aggregate amount of capital raised by the
issuer in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) during the preceding 12-month period, inclusive of the
amount the issuer seeks to raise in the current offering under Section
4(a)(6) of the Securities Act, in which any of the following persons
had or is to have a direct or indirect material interest:
    (1) Any director or officer of the issuer;
    (2) Any person who is, as of the most recent practicable date, the
beneficial owner of 20 percent or more of the issuer's outstanding
voting equity securities, calculated on the basis of voting power;
    (3) If the issuer was incorporated or organized within the past
three years, any promoter of the issuer;
    (4) Any immediate family member of any of the foregoing persons,
which means any child, stepchild, parent, stepparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-
law, or sister-in-law of the person, and any persons (other than a
tenant or employee) sharing the household of the person;
    Instruction to paragraph (r). For each transaction identified,
disclose the name of the specified person and state his or her
relationship to the issuer, the nature of his or her interest in the
transaction and, where practicable, the approximate amount of the
interest of such specified person. The amount of such interest shall be
computed without regard to the amount of the profit or loss involved in
the transaction. Where it is not practicable to state the approximate
amount of the interest, the approximate amount involved in the
transaction shall be disclosed.
    (s) A description of the financial condition of the issuer;
    Instruction to paragraph (s). In providing a description of the
issuer's financial condition, provide a discussion, to the extent
material, of the issuer's historical results of operations, liquidity
and capital resources. For issuers with no prior operating history, the
description should include a discussion of financial milestones and
operational, liquidity and other challenges. For issuers with an
operating history, the discussion should address whether historical
earnings and cash flows are representative of what investors should
expect in the future. Issuers should take into account the proceeds of
the offering and any other known or pending sources of capital. Issuers
should also discuss how the proceeds from the offering will impact the
issuer's liquidity and the necessity of receiving these funds and any
other additional funds to the viability of the business. In addition,
issuers should describe the other available sources of capital to the
business, such as lines of credit or required contributions by
shareholders.
    (t) For offerings that, together with all other offerings of the
issuer under Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) within the preceding 12-month period, have, in the
aggregate, target offering amounts of:
    (1) $100,000 or less, the income tax returns filed by the issuer
for the most recently completed year (if any) and financial statements
of the issuer, which shall be certified by the principal executive
officer of the issuer to be true and complete in all material respects;
    (2) More than $100,000, but not more than $500,000, financial
statements reviewed by a public accountant who is independent of the
issuer, using the Statements on Standards for Accounting and Review
Services issued by the Accounting and Review Services Committee of the
American Institute of Certified Public Accountants; and
    (3) More than $500,000, financial statements audited by a public
accountant who is independent of the issuer, using auditing standards
issued by either the American Institute of Certified Public Accountants
or the Public Company Accounting Oversight Board;
    Instruction 1 to paragraph (t). To determine the financial
statements that would be required under paragraph (t), an issuer would
aggregate amounts offered and sold in reliance on Section 4(a)(6) of
the Securities Act (15 U.S.C. 77d(a)(6)) within the preceding 12-month
period and the offering amount in the offering for which disclosure is
being provided. If the issuer will accept proceeds in excess of the
target offering amount, the issuer must include in the calculation to
determine the financial statements that would be required under
paragraph (t) the maximum offering amount that the issuer will accept.
    Instruction 2 to paragraph (t). The financial statements required
by paragraphs (t)(1), (t)(2) and (t)(3) of this section would include a
balance sheet, income statement, statement of cash flows and statement
of changes in owners' equity and notes to the financial statements
prepared in accordance with U.S. generally accepted accounting
principles (U.S. GAAP). The required financial statements must cover
the shorter of the two most recently completed fiscal years or the
period since inception.
    Instruction 3 to paragraph (t). An issuer shall redact personally
identifiable information from any tax returns required to be provided
under paragraph (t)(1) of this section. Issuers offering securities in
a transaction in reliance on Section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)) before filing a tax return with the U.S. Internal
Revenue Service for the most recently completed fiscal year may use the
tax return filed with the U.S. Internal Revenue Service for the prior
year (if any), provided that the issuer uses the tax return for the
most recent fiscal year when it is filed, if filed during the offering
period.
    Instruction 4 to paragraph (t). With respect to the financial
statements required by paragraph (t)(1) of this section, an issuer's
principal executive officer must provide the following certification in
the Form C--Offering Statement (Sec.  239.900 of this chapter):

    I, [identify the certifying individual], certify that the financial
statements of [identify the issuer] included in this Form are true and
complete in all material respects. [Signature and title].
    Instruction 5 to paragraph (t). A copy of the public accountant's
review report must accompany the financial statements required by
paragraph (t)(2) of this section.
    Instruction 6 to paragraph (t). A copy of the audit report must
accompany financial statements required by paragraph (t)(3) of this
section. An issuer will be in compliance with the requirement to
provide audited financial statements if the issuer received an
unqualified or a qualified opinion, but it will not be in compliance
with the requirement if it received an adverse opinion or a disclaimer
of opinion.
    Instruction 7 to paragraph (t). To qualify as an independent public
accountant for purposes of paragraphs (t)(2) and (t)(3) of this
section, the accountant must satisfy the independence requirements in
Rule 2-01 of Regulation S-X (17 CFR 210.2-01).
    Instruction 8 to paragraph (t). An issuer may conduct an offering
in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) using financial statements for the fiscal year prior to the
issuer's most recently completed fiscal year, provided that the issuer
was not otherwise already required to update the financial statements
pursuant to Sec.  227.202 and updated financial statements are not
otherwise available. If more than 120 days have passed since the end of
the issuer's most recently completed fiscal year, the issuer must use
financial statements for its most recently completed fiscal year.
    Instruction 9 to paragraph (t). An issuer must include a discussion
of any material changes in the financial condition of the issuer during
any time period subsequent to the period for which financial statements
are provided, including changes in reported revenue or net income.
    Instruction 10 to paragraph (t). An issuer may voluntarily provide
financial statements that meet the requirements for a higher aggregate
target offering amount, even if the aggregate amounts sold in reliance
on Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) within
the preceding 12-month period do not require it.
    (u) Any matters that would have triggered disqualification under
Sec.  227.503(a) had they occurred on or after [effective date of final
rule]. The failure to furnish such disclosure timely shall not prevent
an issuer from continuing to rely on the exemption provided by Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) if the issuer
establishes that it did not know and, in the exercise of reasonable
care, could not have known of the existence of the undisclosed matter
or matters; and
    Instruction to paragraph (u). An issuer will not be able to
establish that it has exercised reasonable care unless it has made
factual inquiry into whether any disqualifications exist. The nature
and scope of the factual inquiry will vary based on the facts and
circumstances concerning, among other things, the issuer and the other
offering participants.
    (v) Updates regarding the progress of the issuer in meeting the
target offering amount, to be provided in accordance with Sec.
227.203.

Sec.  227.202  Ongoing reporting requirements.

    (a) An issuer that has offered and sold securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) and in
accordance with Section 4A of the Securities Act (15 U.S.C. 77d-1) and
this part must file with the Commission on EDGAR and post on the
issuer's Web site an annual report of its results of operations as
described in Sec.  227.201(s) and financial statements of the issuer
for the highest aggregate target offering amount previously provided
under Sec.  227.201(t). The report also must include the disclosure
required by paragraphs (a), (b), (c), (d), (e), (f), (m), (p), (q), and
(r) of Sec.  227.201. The report must be filed in accordance with the
requirements of Sec.  227.203 and Form C (Sec.  239.900 of this
chapter) and no later than 120 days after the end of the fiscal year
covered by the report.
    (b) An issuer must continue to comply with the ongoing reporting
requirements until:
    (1) The issuer becomes a reporting company required to file reports
under Section 13(a) or Section 15(d) of the Exchange Act (15 U.S.C.
78m(a) or 78o(d));
    (2) The issuer or another party repurchases all of the securities
issued in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)), including any payment in full of debt securities or any
complete redemption of redeemable securities; or
    (3) The issuer liquidates or dissolves its business in accordance
with state law.

Sec.  227.203  Filing requirements and form.

    (a) Form C--Offering Statement and Amendments (Sec.  239.900 of
this chapter).
    (1) Offering Statement. An issuer offering or selling securities in
reliance on Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6))
and in accordance with Section 4A of the Securities Act (15 U.S.C. 77d-
1) and this part must file with the Commission on EDGAR, provide to
investors and the relevant intermediary, and make available to
potential investors a Form C: Offering Statement (Form C) (Sec.
239.900 of this chapter) prior to the commencement of the offering of
securities. The Form C must include the information required by Sec.
227.201 of Regulation Crowdfunding.
    Instruction to paragraph (a)(1). An issuer shall input the
following information in the XML-based portion of Form C (Sec.  239.900
of this chapter): name, legal status and contact information of the
issuer; name, Commission file number and CRD number (as applicable) of
the intermediary through which the offering will be conducted; amount
of compensation paid to the intermediary, including the amount of
referral and other fees associated with the offering; type of security
offered; number of securities offered; offering price; target offering
amount and maximum offering amount (if different from the target
offering amount); whether oversubscriptions will be accepted and, if
so, how they will be allocated; deadline to reach the target offering
amount; current number of employees; and selected financial data for
the prior two fiscal years (including total assets, cash and cash
equivalents, accounts receivable, short-term debt, long-term debt,
revenues/sales, cost of goods sold, taxes paid and net income).
    (2) Amendments to Offering Statement. An issuer must file with the
Commission on EDGAR, provide to investors and the relevant
intermediary, and make available to potential investors an amendment to
the offering statement filed on Form C (Sec.  239.900 of this chapter)
to disclose any material changes, additions or updates to information
that it provides to investors through the intermediary's platform, only
if the offering has not yet been completed or terminated. The amendment
must be filed on Form C: Amendment (Form C-A) (Sec.  239.900 of this
chapter), and if the amendment reflects material changes, additions or
updates, the issuer shall check the box indicating that investors must
reconfirm an investment commitment within five business days or the
investor's commitment will be considered withdrawn.
    Instruction to paragraph (a)(2). An issuer may file an amendment on
Form

C-A (Sec.  239.900 of this chapter) to reflect changes, additions or
updates that it considers not material, and in such circumstance, an
issuer should not check the box indicating that investors must
reconfirm the investment commitment within five business days.
    (3) Progress Updates. An issuer must file with the Commission on
EDGAR, provide to investors and the relevant intermediary, and make
available to potential investors a Form C: Progress Update (Form C-U)
(Sec.  239.900 of this chapter) to disclose its progress in meeting the
target offering amount no later than five business days after the
issuer reaches one-half and 100 percent of the target offering amount.
If the issuer will accept proceeds in excess of the target offering
amount, the issuer must file with the Commission on EDGAR, provide to
investors and the relevant intermediary, and make available to
potential investors, no later than five business days after the
offering deadline, a final Form C-U to disclose the total amount of
securities sold in the offering.
    Instruction 1 to paragraph (a)(3). An issuer shall input the
progress update in the XML-based portion of Form C-U (Sec.  239.900 of
this chapter).
    Instruction 2 to paragraph (a)(3). If multiple Forms C-U (Sec.
239.900 of this chapter) are triggered within the same five business
day period, the issuer may consolidate such progress updates into one
Form C-U, so long as the Form C-U discloses the most recent threshold
that was met and the Form C-U is filed with the Commission on EDGAR,
provided to investors and the relevant intermediary, and made available
to potential investors by the day on which the first progress update is
due.
    Instruction 1 to paragraph (a). An issuer would satisfy the
requirement to provide to the relevant intermediary the information
required by Sec.  227.203(a) if the issuer provides to the relevant
intermediary a copy of the disclosures filed with the Commission on
EDGAR.
    Instruction 2 to paragraph (a). An issuer would satisfy the
requirement to provide to investors and to make available to potential
investors the information required by Sec.  227.203(a) if the issuer
refers investors to the information on the intermediary's platform by
means of a posting on the issuer's Web site or by email.
    (b) Form C: Annual Report (Sec.  239.900 of this chapter). (1) An
issuer that sold securities in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) and in accordance with Section 4A
of the Securities Act (15 U.S.C. 77d-1) and this part must file an
annual report on Form C: Annual Report (Form C-AR) (Sec.  239.900 of
this chapter) with the Commission no later than 120 days after the end
of the fiscal year covered by the report. The annual report shall
include the information required by Sec.  227.202(a).
    Instruction to paragraph (b)(1). An issuer shall input the
following information in the XML-based portion of Form C-AR (Sec.
239.900 of this chapter): Name, legal status and contact information of
the issuer; current number of employees; and selected financial data
for the prior two fiscal years (including total assets, cash and cash
equivalents, accounts receivable, short-term debt, long-term debt,
revenues/sales, cost of goods sold, taxes paid and net income).
    (2) An issuer eligible to terminate its obligation to file annual
reports with the Commission pursuant to Sec.  227.202(b) must file,
within five business days from the date on which the issuer becomes
eligible to terminate is reporting obligation, Form C: Termination of
Reporting (Form C-TR) (Sec.  239.900 of this chapter) with the
Commission to advise investors that the issuer will cease reporting
pursuant to this part.

Sec.  227.204  Advertising.

    (a) An issuer may not advertise directly or indirectly the terms of
an offering made in reliance on Section 4(a)(6) of the Securities Act
(15 U.S.C. 77d(a)(6)), except for notices that direct investors to the
intermediary's platform.
    (b) A notice regarding the terms of an issuer's offering in
reliance on Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6))
that directs investors to the intermediary's platform may include no
more than the following:
    (1) A statement that the issuer is conducting an offering pursuant
to Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)), the
name of the intermediary through which the offering is being conducted
and a link directing the potential investor to the intermediary's
platform;
    (2) The terms of the offering; and
    (3) Factual information about the legal identity and business
location of the issuer, limited to the name of the issuer of the
security, the address, phone number and Web site of the issuer, the
email address of a representative of the issuer and a brief description
of the business of the issuer.
    (c) Notwithstanding the prohibition on advertising the terms of the
offering, an issuer may communicate with investors and potential
investors about the terms of the offering through communication
channels provided by the intermediary on the intermediary's platform,
provided that an issuer identifies itself as the issuer in all
communications.
    Instruction to Sec.  227.204. For purposes of this section, terms
of the offering means the amount of securities offered, the nature of
the securities, the price of the securities and the closing date of the
offering period.

Sec.  227.205  Promoter compensation.

    (a) An issuer shall be permitted to compensate or commit to
compensate, directly or indirectly, any person to promote its offerings
in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) through communication channels provided by an intermediary
on the intermediary's platform, but only if the issuer takes reasonable
steps to ensure that such person clearly discloses the receipt, past or
prospective, of such compensation with any such communication. A
founder or an employee of the issuer that engages in promotional
activities on behalf of the issuer through the communication channels
provided by the intermediary must disclose, with each posting, that he
or she is engaging in those activities on behalf of the issuer.
    (b) Other than as set forth in paragraph (a) of this section, an
issuer shall not compensate or commit to compensate, directly or
indirectly, any person to promote its offerings in reliance on Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)), unless such
promotion is limited to notices permitted by, and in compliance with,
Sec.  227.204.

Subpart C--Requirements for Intermediaries

Sec.  227.300  Intermediaries.

    (a) Requirements. A person acting as an intermediary in a
transaction involving the offer or sale of securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) must:
    (1) Be registered with the Commission as a broker under Section
15(b) of the Exchange Act (15 U.S.C. 78o(b)) or as a funding portal in
accordance with the requirements of Sec.  227.400; and
    (2) Be a member of the Financial Industry Regulatory Authority or
any other applicable national securities association registered under
Section 15A of the Exchange Act (15 U.S.C. 78o-3).
    (b) Prohibitions. An intermediary and any director, officer or
partner, or any person occupying a similar status or performing a
similar function may not have a financial interest in an issuer that

is offering or selling securities in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) through the intermediary's
platform, or receive a financial interest in an issuer as compensation
for the services provided to or for the benefit of the issuer in
connection with the offer or sale of such securities. For purposes of
this paragraph, a financial interest in an issuer means a direct or
indirect ownership of, or economic interest in, any class of the
issuer's securities.
    (c) Definitions. For purposes of this part:
    (1) Associated person of a funding portal or person associated with
a funding portal means any partner, officer, director or manager of a
funding portal (or any person occupying a similar status or performing
similar functions), any person directly or indirectly controlling or
controlled by such funding portal, or any employee of a funding portal,
except that any person associated with a funding portal whose functions
are solely clerical or ministerial shall not be included in the meaning
of such term for purposes of Section 15(b) of the Exchange Act (15
U.S.C. 78o(b)) (other than paragraphs (4) and (6) thereof).
    (2) Funding portal means a broker acting as an intermediary in a
transaction involving the offer or sale of securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)), that does
not:
    (i) Offer investment advice or recommendations;
    (ii) Solicit purchases, sales or offers to buy the securities
displayed on its platform;
    (iii) Compensate employees, agents, or other persons for such
solicitation or based on the sale of securities displayed or referenced
on its platform; or
    (iv) Hold, manage, possess, or otherwise handle investor funds or
securities.
    (3) Intermediary means a broker registered under Section 15(b) of
the Exchange Act (15 U.S.C. 78o(b)) or a funding portal registered
under Sec.  227.400 and includes, where relevant, an associated person
of the registered broker or registered funding portal.
    (4) Investor refers to any investor or any potential investor, as
the context requires.
    (5) Self-regulatory organization or SRO has the meaning as defined
in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), and
includes the Financial Industry Regulatory Authority (FINRA) and any
other national securities association registered with the Commission.

Sec.  227.301  Measures to reduce risk of fraud.

    An intermediary in a transaction involving the offer or sale of
securities in reliance on Section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)) must:
    (a) Have a reasonable basis for believing that an issuer seeking to
offer and sell securities in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) through the intermediary's
platform complies with the requirements in Section 4A(b) of the Act (15
U.S.C. 77d-1(b)) and the related requirements in this part. In
satisfying this requirement, an intermediary may rely on the
representations of the issuer concerning compliance with these
requirements unless the intermediary has reason to question the
reliability of those representations;
    (b) Have a reasonable basis for believing that the issuer has
established means to keep accurate records of the holders of the
securities it would offer and sell through the intermediary's platform.
In satisfying this requirement, an intermediary may rely on the
representations of the issuer concerning compliance with this
requirement unless the intermediary has reason to question the
reliability of those representations.
    (c) Deny access to its platform to an issuer if the intermediary:
    (1) Has a reasonable basis for believing that the issuer or any of
its officers, directors (or any person occupying a similar status or
performing a similar function) or beneficial owners of 20 percent or
more of the issuer's outstanding voting equity securities, calculated
on the basis of voting power, is subject to a disqualification under
Sec.  227.503. In satisfying this requirement, an intermediary must, at
a minimum, conduct a background and securities enforcement regulatory
history check on each issuer whose securities are to be offered by the
intermediary and on each officer, director or beneficial owner of 20
percent or more of the issuer's outstanding voting equity securities,
calculated on the basis of voting power.
    (2) Believes that the issuer or the offering presents the potential
for fraud or otherwise raises concerns regarding investor protection.
In satisfying this requirement, an intermediary must deny access if it
believes that it is unable to adequately or effectively assess the risk
of fraud of the issuer or its potential offering. In addition, if an
intermediary becomes aware of information after it has granted access
that causes it to believe that the issuer or the offering presents the
potential for fraud or otherwise raises concerns regarding investor
protection, the intermediary must promptly remove the offering from its
platform, cancel the offering, and return (or, for funding portals,
direct the return of) any funds that have been committed by investors
in the offering.

Sec.  227.302  Account opening.

    (a) Accounts and Electronic Delivery. (1) No intermediary or
associated person of an intermediary may accept an investment
commitment in a transaction involving the offer or sale of securities
in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)) until the investor has opened an account with the
intermediary and the intermediary has obtained from the investor
consent to electronic delivery of materials.
    (2) An intermediary must provide all information that is required
to be provided by the intermediary under Subpart C (Sec. Sec.  227.300-
305), including, but not limited to, educational materials, notices and
confirmations, through electronic means. Unless otherwise indicated in
the relevant rule of Subpart C, in satisfying this requirement, an
intermediary must provide the information through an electronic message
that contains the information, through an electronic message that
includes a specific link to the information as posted on intermediary's
platform, or through an electronic message that provides notice of what
the information is and that it is located on the intermediary's
platform or on the issuer's Web site. Electronic messages include, but
are not limited to, email messages.
    (b) Educational Materials. (1) In connection with establishing an
account for an investor, an intermediary must deliver educational
materials to such investor that explain in plain language and are
otherwise designed to communicate effectively and accurately:
    (i) The process for the offer, purchase and issuance of securities
through the intermediary and the risks associated with purchasing
securities offered and sold in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6));
    (ii) The types of securities offered and sold in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) available
for purchase on the intermediary's platform and the risks associated
with each type of security, including the risk of having limited voting
power as a result of dilution;
    (iii) The restrictions on the resale of a security offered and sold
in reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6));
    (iv) The types of information that an issuer is required to provide
under Sec.  227.202, the frequency of the delivery

of that information and the possibility that those obligations may
terminate in the future;
    (v) The limitations on the amounts an investor may invest pursuant
to Sec.  227.100(a)(2);
    (vi) The limitations on an investor's right to cancel an investment
commitment and the circumstances in which an investment commitment may
be cancelled by the issuer;
    (vii) The need for the investor to consider whether investing in a
security offered and sold in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) is appropriate for that investor;
and
    (viii) That following completion of an offering conducted through
the intermediary, there may or may not be any ongoing relationship
between the issuer and intermediary.
    (2) An intermediary must make the most current version of its
educational material available on its platform at all times and, if at
any time, the intermediary makes a material revision to its educational
materials, it must make the revised educational materials available to
all investors before accepting any additional investment commitments or
effecting any further transactions in securities offered and sold in
reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)).
    (c) Promoters. In connection with establishing an account for an
investor, an intermediary must inform the investor that any person who
promotes an issuer's offering for compensation, whether past or
prospective, or who is a founder or an employee of an issuer that
engages in promotional activities on behalf of the issuer on the
intermediary's platform, must clearly disclose in all communications on
the intermediary's platform, respectively, the receipt of the
compensation and that he or she is engaging in promotional activities
on behalf of the issuer.
    (d) Compensation Disclosure. When establishing an account for an
investor, an intermediary must clearly disclose the manner in which the
intermediary is compensated in connection with offerings and sales of
securities in reliance on Section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)).

Sec.  227.303  Requirements with respect to transactions.

    (a) Issuer Information. An intermediary in a transaction involving
the offer or sale of securities in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) must make available to the
Commission and to investors any information required to be provided by
the issuer of the securities under Sec. Sec.  227.201 and 203(a).
    (1) This information must be made publicly available on the
intermediary's platform, in a manner that reasonably permits a person
accessing the platform to save, download, or otherwise store the
information;
    (2) This information must be made publicly available on the
intermediary's platform for a minimum of 21 days before any securities
are sold in the offering, during which time the intermediary may accept
investment commitments;
    (3) This information, including any additional information provided
by the issuer, must remain publicly available on the intermediary's
platform until the offer and sale of securities in reliance on Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) is completed or
cancelled; and
    (4) An intermediary may not require any person to establish an
account with the intermediary to access this information.
    (b) Investor Qualification. Each time before accepting any
investment commitment (including any additional investment commitment
from the same person), an intermediary must:
    (1) Have a reasonable basis for believing that the investor
satisfies the investment limitations established by Section 4(a)(6)(B)
of the Act (15 U.S.C. 77d(a)(6)(B)) and Regulation Crowdfunding
(Sec. Sec.  227.100 et seq.). An intermediary may rely on an investor's
representations concerning compliance with the investment limitation
requirements concerning the investor's annual income, net worth, and
the amount of the investor's other investments made pursuant to Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) unless the
intermediary has reason to question the reliability of the
representation.
    (2) Obtain from the investor:
    (i) A representation that the investor has reviewed the
intermediary's educational materials delivered pursuant to Sec.
227.302(b), understands that the entire amount of his or her investment
may be lost, and is in a financial condition to bear the loss of the
investment; and
    (ii) A questionnaire completed by the investor demonstrating the
investor's understanding that:
    (A) There are restrictions on the investor's ability to cancel an
investment commitment and obtain a return of his or her investment;
    (B) It may be difficult for the investor to resell securities
acquired in reliance on Section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)); and
    (C) Investing in securities offered and sold in reliance on Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) involves risk, and
the investor should not invest any funds in an offering made in
reliance on Section 4(a)(6) of the Securities Act unless he or she can
afford to lose the entire amount of his or her investment.
    (c) Communication Channels. An intermediary must provide on its
platform communication channels by which persons can communicate with
one another and with representatives of the issuer about offerings made
available on the intermediary's platform, provided:
    (1) If the intermediary is a funding portal, it does not
participate in these communications other than to establish guidelines
for communication and remove abusive or potentially fraudulent
communications;
    (2) The intermediary permits public access to view the discussions
made in the communication channels;
    (3) The intermediary restricts posting of comments in the
communication channels to those persons who have opened an account with
the intermediary on its platform; and
    (4) The intermediary requires that any person posting a comment in
the communication channels clearly and prominently disclose with each
posting whether he or she is a founder or an employee of an issuer
engaging in promotional activities on behalf of the issuer, or is
otherwise compensated, whether in the past or prospectively, to promote
the issuer's offering.
    (d) Notice of Investment Commitment. An intermediary must promptly,
upon receipt of an investment commitment from an investor, give or send
to the investor a notification disclosing:
    (1) The dollar amount of the investment commitment;
    (2) The price of the securities, if known;
    (3) The name of the issuer; and
    (4) The date and time by which the investor may cancel the
investment commitment.
    (e) Maintenance and Transmission of Funds. (1) An intermediary that
is a registered broker must comply with the requirements of 17 CFR
240.15c2-4.
    (2) An intermediary that is a funding portal must direct investors
to transmit the money or other consideration directly to a qualified
third party that has agreed in writing to hold the funds for the
benefit of, and to promptly transmit or return the funds to, the
persons entitled thereto in accordance with paragraph (e)(3)of this
section. For purposes of this Subpart C (Sec. Sec.  227.300-305), a
qualified third party means a

bank that has agreed in writing either to hold the funds in escrow for
the persons who have the beneficial interests therein and to transmit
or return such funds directly to the persons entitled thereto when so
directed by the funding portal as described in paragraph (e)(3)of this
section, or to maintain a bank account (or accounts) for the exclusive
benefit of investors and the issuer.
    (3) A funding portal that is an intermediary in a transaction
involving the offer or sale of securities in reliance on Section
4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) shall promptly
direct the qualified third party to:
    (i) Transmit funds from the qualified third party to the issuer
when the aggregate amount of investment commitments from all investors
is equal to or greater than the target amount of the offering and the
cancellation period as set forth in Sec.  227.304 has elapsed, provided
that in no event may the funding portal direct this transmission of
funds earlier than 21 days after the date on which the intermediary
makes publicly available on its platform the information required to be
provided by the issuer under Sec. Sec.  227.201 and 203(a);
    (ii) Return funds to an investor when an investment commitment has
been cancelled in accordance with Sec.  227.304 (including for failure
to obtain effective reconfirmation as required under Sec.  227.304(c));
and
    (iii) Return funds to investors when an issuer does not complete
the offering.
    (f) Confirmation of Transaction. (1) An intermediary must, at or
before the completion of a transaction in a security in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)), give or
send to each investor a notification disclosing:
    (i) The date of the transaction;
    (ii) The type of security that the investor is purchasing;
    (iii) The identity, price, and number of securities purchased by
the investor, as well as the number of securities sold by the issuer in
the transaction and the price(s) at which the securities were sold;
    (iv) If a debt security, the interest rate and the yield to
maturity calculated from the price paid and the maturity date;
    (v) If a callable security, the first date that the security can be
called by the issuer; and
    (vi) The source and amount of any remuneration received or to be
received by the intermediary in connection with the transaction,
including the amount and form of any remuneration that is received, or
will be received, by the intermediary from persons other than the
issuer.
    (2) An intermediary satisfying the requirements of paragraph (1) of
this section is exempt from the requirements of 17 CFR 240.10b-10 with
respect to a transaction in a security offered and sold in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)).

Sec.  227.304  Completion of offerings, cancellations and
reconfirmations.

    (a) Generally. An investor may cancel an investment commitment for
any reason until 48 hours prior to the deadline identified in the
issuer's offering materials. During the 48 hours prior to such
deadline, an investment commitment may not be cancelled except as
provided in paragraph (c) below.
    (b) Early Completion of Offering. If an issuer reaches the target
offering amount prior to the deadline identified in its offering
materials pursuant to Sec.  227.201(g), the issuer may close the
offering on a date earlier than the deadline identified in its offering
materials pursuant to Sec.  227.201(g), provided that:
    (1) The offering remains open for a minimum of 21 days pursuant to
Sec.  227.303(a);
    (2) The intermediary provides notice to any potential investors,
and gives or sends notice to investors that have made investment
commitments in the offering, of:
    (i) The new, anticipated deadline of the offering;
    (ii) The right of investors to cancel investment commitments for
any reason until 48 hours prior to the new offering deadline; and
    (iii) Whether the issuer will continue to accept investment
commitments during the 48-hour period prior to the new offering
deadline.
    (3) The new offering deadline is scheduled for and occurs at least
five business days after the notice required in paragraph b(2) of this
section is provided; and
    (4) At the time of the new offering deadline, the issuer continues
to meet or exceed the target offering amount.
    (c) Cancellations and Reconfirmations Based on Material Changes.
(1) If there is a material change to the terms of an offering or to the
information provided by the issuer, the intermediary must give or send
to any investor who has made an investment commitment notice of the
material change and that the investor's investment commitment will be
cancelled unless the investor reconfirms his or her investment
commitment within five business days of receipt of the notice. If the
investor fails to reconfirm his or her investment within those five
business days, the intermediary within five business days thereafter
must:
    (i) Give or send the investor a notification disclosing that the
commitment was cancelled, the reason for the cancellation and the
refund amount that the investor is expected to receive; and
    (ii) Direct the refund of investor funds.
    (2) If material changes to the offering or to the information
provided by the issuer regarding the offering occur within five
business days of the maximum number of days that an offering is to
remain open, the offering must be extended to allow for a period of
five business days for the investor to reconfirm his or her investment.
    (d) Return of Funds If Offering Is Not Completed. If an issuer does
not complete an offering, an intermediary must within five business
days:
    (1) Give or send each investor a notification of the cancellation,
disclosing the reason for the cancellation, and the refund amount that
the investor is expected to receive;
    (2) Direct the refund of investor funds; and
    (3) Prevent investors from making investment commitments with
respect to that offering on its platform.

Sec.  227.305  Payments to third parties.

    (a) Prohibition on Payments for Personally Identifiable
Information. An intermediary may not compensate any person for
providing the intermediary with the personally identifiable information
of any investor or potential investor in securities offered and sold in
reliance on Section 4(a)(6) of the Securities Act (15 U.S.C.
77d(a)(6)).
    (b) Certain permitted payments. Subject to paragraph (a) of this
section, an intermediary may compensate a person for directing issuers
or potential investors to the intermediary's platform, provided that
unless the compensation is made to a registered broker or dealer, the
compensation is not based, directly or indirectly, on the purchase or
sale of a security offered in reliance on Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)) on or through the intermediary's
platform.
    (c) For purposes of this rule, personally identifiable information
means information that can be used to distinguish or trace an
individual's identity, either alone or when combined with other
personal or identifying information that is linked or linkable to a
specific individual.

Subpart D--Funding Portal Regulation

Sec.  227.400  Registration of funding portals.

    (a) Registration. A funding portal must register with the
Commission, by filing a complete Form Funding Portal (Sec.  249.1500 of
this chapter) in accordance with the instructions on the form, and
become a member of the Financial Industry Regulatory Authority or any
other applicable national securities association registered under
Section 15A of the Exchange Act (15 U.S.C. 78o-3). The registration
will be effective the later of:
    (1) 30 calendar days after the date that the registration is
received by the Commission; or
    (2) The date the funding portal is approved for membership by the
Financial Industry Regulatory Authority or any other applicable
national securities association registered under Section 15A of the
Exchange Act (15 U.S.C. 78o-3).
    (b) Amendments to Registration. A funding portal must file an
amendment to Form Funding Portal (Sec.  249.1500 of this chapter)
within 30 days of any of the information previously submitted on Form
Funding Portal becoming inaccurate for any reason.
    (c) Successor Registration. (1) If a funding portal succeeds to and
continues the business of a registered funding portal, the registration
of the predecessor will remain effective as the registration of the
successor if the successor, within 30 days after such succession, files
a registration on Form Funding Portal (Sec.  249.1500 of this chapter)
and the predecessor files a withdrawal on Form Funding Portal;
provided, however, that the registration of the predecessor funding
portal will be deemed withdrawn 45 days after registration on Form
Funding Portal is filed by the successor.
    (2) Notwithstanding paragraph (c)(1) of this section, if a funding
portal succeeds to and continues the business of a registered funding
portal and the succession is based solely on a change of the
predecessor's date or state of incorporation, form of organization, or
composition of a partnership, the successor may, within 30 days after
the succession, amend the registration of the predecessor on Form
Funding Portal (Sec.  249.1500 of this chapter) to reflect these
changes.
    (d) Withdrawal. A funding portal must promptly file a withdrawal of
registration on Form Funding Portal (Sec.  249.1500 of this chapter) in
accordance with the instructions on the form upon ceasing to operate as
a funding portal. Withdrawal will be effective on the later of 30 days
after receipt by the Commission, after the funding portal is no longer
operational, or within such longer period of time as to which the
funding portal consents or which the Commission by order may determine
as necessary or appropriate in the public interest or for the
protection of investors.
    (e) Applications and Reports. The applications and reports provided
for in this section shall be considered filed when a complete Form
Funding Portal (Sec.  249.1500 of this chapter) is submitted with the
Commission or its designee. Duplicate originals of the applications and
reports provided for in this section must be filed with surveillance
personnel designated by any registered national securities association
of which the funding portal is a member.
    (f) Fidelity Bond. As a condition to becoming registered as a
funding portal, the funding portal must have in place and thereafter
maintain, for the duration of the period when it maintains such
registration, fidelity bond coverage that:
    (1) Has a minimum coverage of $100,000;
    (2) Covers any associated person of the funding portal unless
otherwise excepted in the rules set forth by the Financial Industry
Regulatory Authority or any applicable national securities association
that is registered under Section 15A of the Exchange Act (15 U.S.C.
78o-3) of which it is a member; and
    (3) Meets any other applicable requirements as set forth by the
Financial Industry Regulatory Authority or any applicable national
securities association that is registered under Section 15A of the
Exchange Act (15 U.S.C. 78o-3) of which it is a member.
    (g) Nonresident Funding Portals. Registration pursuant to this
section by a nonresident funding portal shall be conditioned upon there
being an information sharing arrangement in place between the
Commission and the competent regulator in the jurisdiction under the
laws of which the nonresident funding portal is organized or where it
has its principal place of business, that is applicable to the
nonresident funding portal.
    (1) Definition. For purposes of this section, the term nonresident
funding portal shall mean a funding portal incorporated in or organized
under the laws of a jurisdiction outside of the United States or its
territories, or having its principal place of business in any place not
in the United States or its territories.
    (2) Power of Attorney. (i) Each nonresident funding portal
registered or applying for registration pursuant to this section shall
obtain a written consent and power of attorney appointing an agent in
the United States, other than the Commission or a Commission member,
official or employee, upon whom may be served any process, pleadings or
other papers in any action. This consent and power of attorney must be
signed by the nonresident funding portal and the named agent(s) for
service of process.
    (ii) Each nonresident funding portal registered or applying for
registration pursuant to this section shall, at the time of filing its
application on Form Funding Portal (Sec.  249.1500 of this chapter),
furnish to the Commission the name and address of its United States
agent for service of process on Schedule C to the Form.
    (iii) Any change of a nonresident funding portal's agent for
service of process and any change of name or address of a nonresident
funding portal's existing agent for service of process shall be
communicated promptly to the Commission through amendment of the
Schedule C to Form Funding Portal (Sec.  249.1500 of this chapter).
    (iv) Each nonresident funding portal must promptly appoint a
successor agent for service of process if the nonresident funding
portal discharges its identified agent for service of process or if its
agent for service of process is unwilling or unable to accept service
on behalf of the nonresident funding portal.
    (v) Each nonresident funding portal must maintain, as part of its
books and records, the written consent and power of attorney identified
in paragraph (g)(2)(i) of this section for at least three years after
the agreement is terminated.
    (3) Access to Books and Records.
    (i) Certification and Opinion of Counsel. Any nonresident funding
portal applying for registration pursuant to this section shall certify
on Schedule C to Form Funding Portal (Sec.  249.1500 of this chapter)
and provide an opinion of counsel that the nonresident funding portal
can, as a matter of law, provide the Commission and any national
securities association of which it is a member with prompt access to
the books and records of such nonresident funding portal and can, as a
matter of law, submit to onsite inspection and examination by the
Commission and any national securities association of which it is a
member.
    (ii) Amendments. The nonresident funding portal shall re-certify,
on Schedule C to Form Funding Portal (Sec.  249.1500 of this chapter),
within 90 days after any changes in the legal or regulatory framework
that would impact the nonresident funding portal's ability to provide,
or the manner in which it

provides, the Commission, or any national securities association of
which it is a member, with prompt access to its books and records or
that would impact the Commission's or such national securities
association's ability to inspect and examine the nonresident funding
portal. The re-certification shall be accompanied by a revised opinion
of counsel describing how, as a matter of law, the nonresident funding
portal can continue to meet its obligations to provide the Commission
and such national securities association with prompt access to its
books and records and to be subject to Commission and national
securities association inspection and examination under the new
regulatory regime.

Sec.  227.401  Exemption.

    (a) A funding portal that is registered with the Commission
pursuant to Sec.  227.400 is exempt from the broker registration
requirements of Section 15(a)(1) of the Exchange Act (15 U.S.C.
78o(a)(1)) in connection with its activities as a funding portal.
    (b) Notwithstanding paragraph (a) of this section, for purposes of
31 CFR chapter X, a funding portal is ``required to be registered'' as
a broker or dealer with the Commission under the Exchange Act.

Sec.  227.402  Conditional safe harbor.

    (a) General. Under Section 3(a)(80) of the Exchange Act (15 U.S.C.
78c(a)(80)), a funding portal acting as an intermediary in a
transaction involving the offer or sale of securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) may not:
Offer investment advice or recommendations; solicit purchases, sales,
or offers to buy the securities offered or displayed on its platform or
portal; compensate employees, agents, or other persons for such
solicitation or based on the sale of securities displayed or referenced
on its platform or portal; hold, manage, possess, or otherwise handle
investor funds or securities; or engage in such other activities as the
Commission, by rule, determines appropriate. This section is intended
to provide clarity with respect to the ability of a funding portal to
engage in certain activities, consistent with the prohibitions under
Section 3(a)(80) of the Exchange Act. No presumption shall arise that a
funding portal has violated the prohibitions under Section 3(a)(80) of
the Exchange Act or this part by reason of the funding portal or its
associated persons engaging in activities in connection with the offer
or sale of securities in reliance on Section 4(a)(6) of the Securities
Act that do not meet the conditions specified in paragraph (b) of this
section. The antifraud provisions and all other applicable provisions
of the federal securities laws continue to apply to the activities
described in paragraph (b) of this section.
    (b) Permitted Activities. A funding portal may, consistent with the
prohibitions under Section 3(a)(80) of the Exchange Act (15 U.S.C.
78c(a)(80)) and this part:
    (1) Apply objective criteria to limit the securities offered in
reliance on Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6))
through the funding portal's platform where:
    (i) The criteria are reasonably designed to result in a broad
selection of issuers offering securities through the funding portal's
platform, are applied consistently to all potential issuers and
offerings and are clearly displayed on the funding portal's platform;
and
    (ii) The criteria may include, among other things, the type of
securities being offered (for example, common stock, preferred stock or
debt securities), the geographic location of the issuer and the
industry or business segment of the issuer, provided that a funding
portal may not deny access to an issuer based on the advisability of
investing in the issuer or its offering, except to the extent described
in paragraph (b)(10) of this section;
    (2) Apply objective criteria to highlight offerings on the funding
portal's platform where:
    (i) The criteria are reasonably designed to highlight a broad
selection of issuers offering securities through the funding portal's
platform, are applied consistently to all issuers and offerings and are
clearly displayed on the funding portal's platform;
    (ii) The criteria may include, among other things, the type of
securities being offered (for example, common stock, preferred stock or
debt securities); the geographic location of the issuer; the industry
or business segment of the issuer; the number or amount of investment
commitments made, progress in meeting the issuer's target offering
amount or, if applicable, the maximum offering amount; and the minimum
or maximum investment amount; provided that a funding portal may not
highlight an issuer or offering based on the advisability of investing
in the issuer or its offering; and
    (iii) The funding portal does not receive special or additional
compensations for highlighting one or more issuers or offerings on its
platform;
    (3) Provide search functions or other tools that investors can use
to search, sort, or categorize the offerings available through the
funding portal's platform according to objective criteria where;
    (i) The objective criteria may include, among other things, the
type of securities being offered (for example, common stock, preferred
stock or debt securities); the geographic location of the issuer; the
industry or business segment of the issuer; the number or amount of
investment commitments made, progress in meeting the issuer's target
offering amount or, if applicable, the maximum offering amount; and the
minimum or maximum investment amount; and
    (ii) The objective criteria may not include, among other things,
the advisability of investing in the issuer or its offering, or an
assessment of any characteristic of the issuer, its business plan, its
key management or risks associated with an investment.
    (4) Provide communication channels by which investors can
communicate with one another and with representatives of the issuer
through the funding portal's platform about offerings through the
platform, so long as the funding portal (and its associated persons):
    (i) Does not participate in these communications, other than to
establish guidelines for communication and remove abusive or
potentially fraudulent communications;
    (ii) Permits public access to view the discussions made in the
communication channels;
    (iii) Restricts posting of comments in the communication channels
to those persons who have opened an account on its platform; and
    (iv) Requires that any person posting a comment in the
communication channels clearly disclose with each posting whether he or
she is a founder or an employee of an issuer engaging in promotional
activities on behalf of the issuer, or is otherwise compensated,
whether in the past or prospectively, to promote an issuer's offering;
    (5) Advise an issuer about the structure or content of the issuer's
offering, including assisting the issuer in preparing offering
documentation;
    (6) Compensate a third party for referring a person to the funding
portal, so long as the third party does not provide the funding portal
with personally identifiable information of any potential investor, and
the compensation, other than that paid to a registered broker or
dealer, is not based, directly or indirectly, on the purchase or sale
of a security in reliance on Section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)) offered on or through the funding portal's platform;

    (7) Pay or offer to pay any compensation to a registered broker or
dealer for services in connection with the offer or sale of securities
by the funding portal in reliance on Section 4(a)(6) of the Act(15
U.S.C. 77d(a)(6)), provided that:
    (i) Such services are provided pursuant to a written agreement
between the funding portal and the registered broker or dealer;
    (ii) Such compensation is permitted under this part and is not
otherwise prohibited under Sec.  227.305; and
    (iii) Such compensation complies with and is not prohibited by the
rules of any registered national securities association of which the
funding portal is required to be a member;
    (8) Receive any compensation from a registered broker or dealer for
services provided by the funding portal in connection with the offer or
sale of securities by the funding portal in reliance on Section 4(a)(6)
of the Act (15 U.S.C. 77d(a)(6)), provided that:
    (i) Such services are provided pursuant to a written agreement
between the funding portal and the registered broker or dealer;
    (ii) Such compensation is permitted under this part; and
    (iii) Such compensation complies with and is not prohibited by the
rules of any registered national securities association of which the
funding portal is required to be a member;
    (9) Advertise the existence of the funding portal and identify one
or more issuers or offerings available on the portal on the basis of
objective criteria, as long as:
    (i) The criteria are reasonably designed to identify a broad
selection of issuers offering securities through the funding portal's
platform, and are applied consistently to all potential issuers and
offerings;
    (ii) The criteria may include, among other things, the type of
securities being offered (for example, common stock, preferred stock or
debt securities); the geographic location of the issuer; the industry
or business segment of the issuer; the expressed interest by investors,
as measured by number or amount of investment commitments made,
progress in meeting the issuer's target offering amount or, if
applicable, the maximum offering amount; and the minimum or maximum
investment amount; and
    (iii) The funding portal does not receive special or additional
compensation for identifying the issuer or offering in this manner;
    (10) Deny access to its platform to, or cancel an offering of, an
issuer that the funding portal believes may present the potential for
fraud or otherwise raises investor protection concerns;
    (11) Accept, on behalf of an issuer, an investment commitment for
securities offered in reliance on Section 4(a)(6) of the Securities Act
(15 U.S.C. 77d(a)(6)) by that issuer on the funding portal's platform;
    (12) Direct investors where to transmit funds or remit payment in
connection with the purchase of securities offered and sold in reliance
on Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)); and
    (13) Direct a qualified third party, as required by Sec.
227.303(e), to release proceeds to an issuer upon completion of a
crowdfunding offering or to return proceeds to investors in the event
an investment commitment or an offering is cancelled.

Sec.  227.403  Compliance.

    (a) Policies and Procedures. A funding portal must implement
written policies and procedures reasonably designed to achieve
compliance with the federal securities laws and the rules and
regulations thereunder relating to its business as a funding portal.
    (b) Anti-Money Laundering. A funding portal must comply with the
requirements of 31 CFR chapter X applicable to registered brokers.
    (c) Privacy. A funding portal must comply with the requirements of
17 CFR 248 as they apply to brokers.
    (d) Inspections and Examinations. A funding portal shall permit the
examination and inspection of all of its business and business
operations that relate to its activities as a funding portal, such as
its premises, systems, platforms, and records by representatives of the
Commission and of the national securities association of which it is a
member.

Sec.  227.404  Records to be made and kept by funding portals.

    (a) Generally. A funding portal shall make and preserve the
following records for five years, the first two years in an easily
accessible place:
    (1) All records related to an investor who purchases or attempts to
purchase securities through the funding portal;
    (2) All records related to issuers who offer and sell or attempt to
offer and sell securities through the funding portal and the control
persons of such issuers;
    (3) Records of all communications that occur on or through its
platform;
    (4) All records related to persons that use communication channels
provided by a funding portal to promote an issuer's securities or
communicate with potential investors;
    (5) All records required to demonstrate compliance with the
requirements of Subparts C (Sec. Sec.  227.300-305) and D (Sec. Sec.
227.400-404);
    (6) All notices provided by such funding portal to issuers and
investors generally through the funding portal's platform or otherwise,
including, but not limited to, notices addressing hours of funding
portal operations (if any), funding portal malfunctions, changes to
funding portal procedures, maintenance of hardware and software,
instructions pertaining to access to the funding portal and denials of,
or limitations on, access to the funding portal;
    (7) All written agreements (or copies thereof) entered into by such
funding portal relating to its business as such;
    (8) All daily, monthly and quarterly summaries of transactions
effected through the funding portal, including:
    (i) Issuers for which the target offering amount has been reached
and funds distributed; and
    (ii) Transaction volume, expressed in:
    (A) Number of transactions;
    (B) Number of securities involved in a transaction;
    (C) Total amounts raised by, and distributed to, issuers; and
    (D) Total dollar amounts raised across all issuers, expressed in
U.S. dollars; and
    (9) A log reflecting the progress of each issuer who offers or
sells securities through the funding portal toward meeting the target
offering amount.
    (b) Organizational Documents. A funding portal shall make and
preserve during the operation of the funding portal and of any
successor funding portal, all organizational documents relating to the
funding portal, including but not limited to, partnership agreements,
articles of incorporation or charter, minute books and stock
certificate books (or other similar type documents).
    (c) Format. The records required to be maintained and preserved
pursuant to paragraph (a) of this section must be produced, reproduced,
and maintained in the original, non-alterable format in which they were
created or as permitted under 17 CFR 240.17a-4(f).
    (d) Third Parties. The records required to be made and preserved
pursuant to this section may be prepared or maintained by a third party
on behalf of a funding portal. An agreement with a third party shall
not relieve a funding portal from the responsibility to prepare and
maintain records as specified in this rule. A funding portal must file
with the registered national securities association of which it is a
member, a written undertaking in a form acceptable to the registered
national securities association, signed by a duly authorized

person of the third party, stating in effect that such records are the
property of the funding portal and will be surrendered promptly on
request of the funding portal. The undertaking shall include the
following provision:

    With respect to any books and records maintained or preserved on
behalf of [name of funding portal], the undersigned hereby
acknowledges that the books and records are the property of [name of
funding portal], and hereby undertakes to permit examination of such
books and records at any time, or from time to time, during business
hours by representatives of the Securities and Exchange Commission
and the national securities association of which the funding portal
is a member, and to promptly furnish to the Commission, and the
national securities association of which the funding portal is a
member, a true, correct, complete and current hard copy of any, all,
or any part of, such books and records.

    (e) Review of Records. All records of a funding portal are subject
at any time, or from time to time, to reasonable periodic, special, or
other examination by the representatives of the Commission and the
national securities association of which a funding portal is a member.
    (f) Financial Recordkeeping and Reporting of Currency and Foreign
Transactions. Every funding portal, as it is subject to the
requirements of the Currency and Foreign Transactions Reporting Act of
1970 (15 U.S.C. 5311 et seq.), shall comply with the reporting,
recordkeeping and record retention requirements of 31 CFR chapter X.
Where 31 CFR chapter X and Sec. Sec.  227.404(a) and 404(b) require the
same records or reports to be preserved for different periods of time,
such records or reports shall be preserved for the longer period of
time.

Subpart E--Miscellaneous Provisions

Sec.  227.501  Restrictions on resales.

    (a) Securities issued in a transaction exempt from registration
pursuant to Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6))
may not be transferred by the purchaser of such securities during the
one-year period beginning on the date of purchase, unless such
securities are transferred:
    (1) To the issuer of the securities;
    (2) To an accredited investor;
    (3) As part of an offering registered with the Commission; or
    (4) To a member of the family of the purchaser or the equivalent,
to a trust controlled by the purchaser, to a trust created for the
benefit of a member of the family of the purchaser or the equivalent,
or in connection with the death or divorce of the purchaser or other
similar circumstance.
    (b) For purposes of this Sec.  227.501, the term accredited
investor shall have the same meaning given to such term in 17 CFR
230.501. To transfer securities to an accredited investor during the
one-year period beginning on the date the securities were issued in a
transaction exempt from registration pursuant to Section 4(a)(6) of the
Securities Act (15 U.S.C. 77d(a)(6)), the seller shall reasonably
believe that the person receiving such securities is an accredited
investor.
    (c) For purposes of this section, the term member of the family of
the purchaser or the equivalent includes a child, stepchild,
grandchild, parent, stepparent, grandparent, spouse or spousal
equivalent, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law of the purchaser, and
shall include adoptive relationships.
    Instruction to paragraph (c). For purposes of this paragraph (c),
the term spousal equivalent means a cohabitant occupying a relationship
generally equivalent to that of a spouse.

Sec.  227.502  Insignificant deviations from a term, condition or
requirement of Regulation Crowdfunding.

    (a) A failure to comply with a term, condition, or requirement of
this part will not result in the loss of the exemption from the
requirements of Section 5 of the Securities Act (15 U.S.C. 77e) for any
offer or sale to a particular individual or entity, if the issuer
relying on the exemption shows:
    (1) The failure to comply was insignificant with respect to the
offering as a whole;
    (2) The issuer made a good faith and reasonable attempt to comply
with all applicable terms, conditions and requirements this part; and
    (3) The issuer did not know of such failure where the failure to
comply with a term, condition or requirement of this part was the
result of the failure of the intermediary to comply with the
requirements of Section 4A(a) of the Securities Act (15 U.S.C. 77d-
1(a)) and the related rules, or such failure by the intermediary
occurred solely in offerings other than the issuer's offering.
    (b) Notwithstanding the issuer's reliance on paragraph (a) of this
section, the Commission may bring an enforcement action seeking any
appropriate relief for the issuer's failure to comply with all
applicable terms, conditions and requirements of this part.

Sec.  227.503  Disqualification

    (a) No exemption under this Section 4(a)(6) of the Securities Act
(15 U.S.C. 77d(a)(6)) shall be available for a sale of securities if
the issuer; any predecessor of the issuer; any affiliated issuer; any
director, officer, general partner or managing member of the issuer;
any beneficial owner of 20 percent or more of the issuer's outstanding
voting equity securities, calculated on the basis of voting power; any
promoter connected with the issuer in any capacity at the time of such
sale; any person that has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with such
sale of securities; or any general partner, director, officer or
managing member of any such solicitor:
    (1) Has been convicted, within 10 years before the filing of the
information required by Section 4A(b) of the Securities Act (15 U.S.C.
77d-1(b)) (or five years, in the case of issuers, their predecessors
and affiliated issuers), of any felony or misdemeanor:
    (i) In connection with the purchase or sale of any security;
    (ii) Involving the making of any false filing with the Commission;
or
    (iii) Arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, investment adviser or paid
solicitor of purchasers of securities;
    (2) Is subject to any order, judgment or decree of any court of
competent jurisdiction, entered within five years before the filing of
the information required by Section 4A(b) of the Securities Act (15
U.S.C. 77d-1(b)) that, at the time of such filing, restrains or enjoins
such person from engaging or continuing to engage in any conduct or
practice:
    (i) In connection with the purchase or sale of any security;
    (ii) Involving the making of any false filing with the Commission;
or
    (iii) Arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, investment adviser or paid
solicitor of purchasers of securities;
    (3) Is subject to a final order of a state securities commission
(or an agency or officer of a state performing like functions); a state
authority that supervises or examines banks, savings associations or
credit unions; a state insurance commission (or an agency or officer of
a state performing like functions); an appropriate federal banking
agency; the U.S. Commodity Futures Trading Commission; or the National
Credit Union Administration that:
    (i) At the time of the filing of the information required by
Section 4A(b) of the Securities Act (15 U.S.C. 77d-1(b)), bars the
person from:

    (A) Association with an entity regulated by such commission,
authority, agency or officer;
    (B) Engaging in the business of securities, insurance or banking;
or
    (C) Engaging in savings association or credit union activities; or
    (ii) Constitutes a final order based on a violation of any law or
regulation that prohibits fraudulent, manipulative or deceptive conduct
and for which the order was entered within the 10-year period ending on
the date of the filing of the information required by Section 4A(b) of
the Securities Act (15 U.S.C. 77d-1(b));
    Instruction to paragraph (a)(3). Final order shall mean a written
directive or declaratory statement issued by a federal or state agency,
described in Sec.  227.503(a)(3), under applicable statutory authority
that provides for notice and an opportunity for hearing, which
constitutes a final disposition or action by that federal or state
agency.
    (4) Is subject to an order of the Commission entered pursuant to
Section 15(b) or 15B(c) of the Exchange Act (15 U.S.C. 78o(b) or 78o-
4(c)) or Section 203(e) or (f) of the Investment Advisers Act of 1940
(15 U.S.C. 80b-3(e) or (f)) that, at the time of the filing of the
information required by Section 4A(b) of the Securities Act (15 U.S.C.
77d-1(b)):
    (i) Suspends or revokes such person's registration as a broker,
dealer, municipal securities dealer or investment adviser;
    (ii) Places limitations on the activities, functions or operations
of such person; or
    (iii) Bars such person from being associated with any entity or
from participating in the offering of any penny stock;
    (5) Is subject to any order of the Commission entered within five
years before the filing of the information required by Section 4A(b) of
the Securities Act (15 U.S.C. 77d-1(b)) that, at the time of such
filing, orders the person to cease and desist from committing or
causing a violation or future violation of:
    (i) Any scienter-based anti-fraud provision of the federal
securities laws, including without limitation Section 17(a)(1) of the
Securities Act (15 U.S.C. 77q(a)(1)), Section 10(b) of the Exchange Act
(15 U.S.C. 78j(b)) and 17 CFR 240.10b-5, Section 15(c)(1) of the
Exchange Act (15 U.S.C. 78o(c)(1)) and Section 206(1) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-6(1)) or any other rule or
regulation thereunder; or
    (ii) Section 5 of the Securities Act (15 U.S.C. 77e);
    (6) Is suspended or expelled from membership in, or suspended or
barred from association with a member of, a registered national
securities exchange or a registered national or affiliated securities
association for any act or omission to act constituting conduct
inconsistent with just and equitable principles of trade;
    (7) Has filed (as a registrant or issuer), or was or was named as
an underwriter in, any registration statement or Regulation A (17 CFR
230.251 et seq.) offering statement filed with the Commission that,
within five years before the filing of the information required by
Section 4A(b) of the Securities Act (15 U.S.C. 77d-1(b)), was the
subject of a refusal order, stop order, or order suspending the
Regulation A exemption, or is, at the time of such filing, the subject
of an investigation or proceeding to determine whether a stop order or
suspension order should be issued; or
    (8) Is subject to a United States Postal Service false
representation order entered within five years before the filing of the
information required by Section 4A(b) of the Securities Act (15 U.S.C.
77d-1(b)), or is, at the time of such filing, subject to a temporary
restraining order or preliminary injunction with respect to conduct
alleged by the United States Postal Service to constitute a scheme or
device for obtaining money or property through the mail by means of
false representations.
    (b) Paragraph (a) of this section shall not apply:
    (1) With respect to any conviction, order, judgment, decree,
suspension, expulsion or bar that occurred or was issued before
[effective date of final rule];
    (2) Upon a showing of good cause and without prejudice to any other
action by the Commission, if the Commission determines that it is not
necessary under the circumstances that an exemption be denied;
    (3) If, before the filing of the information required by Section
4A(b) of the Securities Act (15 U.S.C. 77d-1(b)), the court or
regulatory authority that entered the relevant order, judgment or
decree advises in writing (whether contained in the relevant judgment,
order or decree or separately to the Commission or its staff) that
disqualification under paragraph (b) of this section should not arise
as a consequence of such order, judgment or decree;
    (4) If the issuer establishes that it did not know and, in the
exercise of reasonable care, could not have known that a
disqualification existed under paragraph (b) of this section.
    Instruction to paragraph (b)(4). An issuer will not be able to
establish that it has exercised reasonable care unless it has made
factual inquiry into whether any disqualifications exist. The nature
and scope of the factual inquiry will vary based on the facts and
circumstances concerning, among other things, the issuer and the other
offering participants.
    (c) For purposes of paragraph (a) of this section, events relating
to any affiliated issuer that occurred before the affiliation arose
will be not considered disqualifying if the affiliated entity is not:
    (1) In control of the issuer; or
    (2) Under common control with the issuer by a third party that was
in control of the affiliated entity at the time of such events.
    (d) A person that is subject to a statutory disqualification as
defined in Section 3(a)(39) of the Exchange Act (15 U.S.C. 78c(a)(39))
may not act as, or be an associated person of, an intermediary in a
transaction involving the offer or sale of securities in reliance on
Section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)) unless so
permitted pursuant to Commission rule or order.
    Instruction to paragraph (d). 17 CFR 240.17f-2 generally requires
the fingerprinting of every person who is a partner, director, officer
or employee of a broker, subject to certain exceptions.

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS

0
4. The authority citation for part 232 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 781, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *
0
5. Amend Sec.  232.101 by:
0
a. In paragraph (a)(1)(xii) removing ``and'' at the end of the
paragraph;
0
b. In paragraph (a)(1)(xiii) removing the period at the end of the
paragraph and adding in its place a semicolon;
0
c. In paragraph (a)(1)(xvi) removing the period at the end of the
paragraph and adding in its place ``; and''; and
0
d. Adding paragraph (a)(1)(xvii).
    The addition reads as follows:

Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (xvii) Form C (Sec.  239.900 of this chapter).
* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

0
6. The authority citation for part 239 continues to read, in part, as
follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77sss, 78c, 78l, 78m, 78n, 78o(d), 78o-7 note, 78u-5, 78w(a), 78ll,
78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26,
80a-29, 80a-30, and 80a-37, unless otherwise noted.
* * * * *
0
7. Add Sec.  239.900 to read as follows:

Sec.  239.900  Form C.

    This form shall be used for filings under Regulation Crowdfunding.

    Note:  The text of Form C will not appear in the Code of Federal
Regulations.

BILLING CODE 8011-01-P
[GRAPHIC] [TIFF OMITTED] TP05NO13.005

BILLING CODE 8011-01-C

GENERAL INSTRUCTIONS

I. Eligibility Requirements for Use of Form C

    This Form shall be filed by any issuer offering or selling
securities in reliance on the exemption in Securities Act Section
4(a)(6) and in accordance with Section 4A and Regulation Crowdfunding
(Sec.  227.100-503). This Form also shall be used for an annual report
required pursuant to Rule 202 of Regulation Crowdfunding (Sec.
227.202) and for the termination of reporting required pursuant to Rule
203(b)(2) of Regulation Crowdfunding (Sec.  227.203(b)(2)). Careful
attention should be directed to the terms, conditions and requirements
of the exemption.

II. Preparation and Filing of Form C

    Information on the cover page will be generated based on the
information provided in XML format. Other than the cover page, this
Form is not to be used as a blank form to be filled in, but only as a
guide in the preparation of Form C. General information regarding the
preparation, format and how to file this Form is contained in
Regulation S-T, (Sec.  232 et seq.).

III. Information to be Included in the Form

Item 1. Offering Statement Disclosure Requirements

    An issuer filing this Form for an offering in reliance on Section
4(a)(6) of the Securities Act and pursuant to Regulation Crowdfunding
(Sec.  227.100-503) must file the Form prior to the commencement of the
offering and include the information required by Rule 201 of Regulation
Crowdfunding (Sec.  227.201).
    Other than the information required to be provided in XML format,
an issuer may provide the required information in the format included
on the intermediary's platform, including by submitting copies of
screen shots of the relevant information, as appropriate and necessary.

Item 2. Legends