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Crowdfunding means raising funds over the Internet for artistic, charitable and other ventures by seeking small individual contributions from a large number of people with input from the wisdom of the crowd. It has not so far been (legally) used by entrepreneurs to raise capital. The proponents of the Jumpstart Our Business Startups (JOBS) Act1 touted the law as a means to create jobs by deregulating the capital raising process for small business by, among other things, allowing entrepreneurs to use the Internet to sell stocks outside of the restrictions of the securities laws. Opponents of the JOBS Act recalled the pump and dump scams that occurred pursuant to the similar Rule 504 deregulated offerings in the 1990s2 and insisted that various investor protection provisions be added to the law.3 The result is an internally contradictory statute handed over to the Securities and Exchange Commission (SEC) to rationalize through rulemaking.

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