Understanding Reg CF: Remember, don’t say anything until May 16

Regulation Crowdfunding becomes effective on May 16 of this year. What can you say now about your crowdfunding campaign that you plan to launch on May 16? Nothing. Not a word. Otherwise, you blow your exemption from registration and may no longer be eligible to use Reg CF.

Recall, Reg CF is an exemption from registration of securities. Any offer of securities must be registered or exempt. Reg CF is not effective until May 16. So any communication about your offering made before you file your Form C on May 16 is an offer of securities that does not meet the requirements for any available exemption. This could result in a violation of Section 5 of the Securities Act, which is a Bad Act that will prevent you from being able to use Reg CF.

Communication with potential investors is tightly constrained under Reg CF. We will be addressing more issues around that later. For now, just remember, don’t say a thing until your Form C is filed with the SEC and certainly don’t say anything until May 16.

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