The U.S. Securities and Exchange Commission (SEC) pledged to ease crowdfunding requirements on Thursday. The policy will support smaller businesses in pursuit of meeting their “urgent funding needs” as the disruptions brought by the pandemic press further.
According to SEC, the policy seeks to temporarily amend the current crowdfunding setup. Businesses are entitled to the new structure only if they meet the enhanced eligibility requirements. This too requires businesses to transparently disclose to investors their reliance on the relief. It will be implemented starting from the day the rule becomes effective up to Aug.31.
In March, a regulator proposed that smaller, private firms are granted access to larger capital before filing under the agency- a process proven to be taxing and costly. This prompted investor advocates to voice out sentiments, highlighting that even the tighter rules in effect were inadequate to stimulate robust disclosure.