Crowdfunding is a method of raising capital to allow private companies—through the Internet—to sell securities to a large group of investors who purchase in small amounts without having to register the offering with the Securities and Exchange Commission.

The federal Jumpstart Our Business Startups Act of 2012, or JOBS Act, took effect April 5, 2012. The crowdfunding part of the JOBS Act is the Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012, or the CROWDFUND Act. Although the law is effective, the required SEC rules are not.

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