SEC considers allowing startups to “crowdfund”

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WASHINGTON (AP) — Startup companies would be able to sell stock over the Internet to small-time investors under rules put forth Wednesday by federal regulators.

So-called “crowdfunding” has been popular for years now for financing independent films and art projects. This year Congress said startups could use it for raising capital, once regulations are in place to protect potential investors

The Securities and Exchange Commission took a step toward that by voting 5-0 to send crowdfunding rules out for public comment. Final rules could be approved next year.

Under the proposal, people with annual income and net worth of less than $100,000 could invest a maximum of 5 percent of their yearly income. Those will higher incomes could invest up to 10 percent. Companies could raise a maximum of $1 million a year.

 

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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