CROWD-FUNDING OFFERS UNDER CANADIAN AND US SECURITIES REGULATION: WILL AN EXEMPTION WORK?
Keywords:Crowdfunding, securities, Prospectus, Start-up
AbstractThe paper reviews securities regulatory requirements in Canada and the US that may be prohibitively costly for crowd-funding. The authors argue that a regulatory exemption for crowd-funding can, in theory, fit the basic cost-benefit concept behind other regulatory exemptions. Implementing the conceptual cost-benefit basis for crowd-funding exemption while addressing investor protection and administrative issues, however, poses numerous challenges involving trade-offs that are difficult to assess empirically. Restrictions intended to provide investor protection may render the exemption ineffective at addressing the start-up and small business fundraising objectives it is aimed at. At the same time a failure to provide adequate investor protection may have damaging repercussions for the crowd-funding exemption itself and perhaps for other investments.
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