Gardere Attorney Christopher J. Babcock co-authored “Equity Crowdfunding Remains Hampered by Lack of Investment Diversification Options” for VC-List, a website dedicated to the venture capital industry. In the article, the attorneys discuss the limitations non-accredited investors face on their ability to invest in private securities.
“Existing regulations, such as Rule 506(c), allow persons who qualify as ‘accredited investors’ under the Securities Act to purchase equity in early-stage companies through special purpose vehicles and thus can facilitate investor diversification in crowdfunded companies; however, no regulation presently allows non-accredited investors the same right. While the ‘Fix Crowdfunding Act,’ (HR 4855), which passed the U.S. House of Representatives with broad bipartisan support and is expected to pass the U.S. Senate, would allow special purpose vehicles to hold securities sold under Regulation Crowdfunding, such vehicles would be limited to the acquisition, holding and disposition of securities of a single issuer.”
The full article can be accessed here.