SEC finalizes demo days, crowdfunding rules

The Securities and Exchange Commission (SEC) recently published a final rule clarifying acceptable communications during “demo days” and expanding the accessibility of crowdfunding, among other changes. The new rule establishes guidelines to make “demo day” activities exempt from general solicitation requirements. Exempt events must be sponsored by institutions of higher education, nonprofits, incubators, accelerators, local governments or, added in response to SSTI’s letter on the proposed rule, state governments or state/local instrumentalities. The rules provide guidance on the types of communication allowed during the events and limits on compensation for hosting the event, but, unfortunately, the SEC opted not to include any of the clarifications requested by SSTI and other commenters.

The Regulation Crowdfunding rules are largely in line with the SEC’s initial proposal, which was covered in the Digest earlier this year, and include raising the offering limit to $5 million and providing guidance for investment limits on non-accredited investors. Temporary rules relaxing crowdfunding information disclosures have been extended another 18 months (see SSTI's initial coverage for more details).

These amendments will take effect 60 days after publication in the Federal Register.