What’s Illegal About Crowd Funding?

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People say you can not do general solicitation.
If you are trying to sell securities by general solicitation, then you are doing something which
violates SEC rules.


One of the conditions of Rule 506 is the ban on general solicitation. The ban on general solicitation is described in accompanying Rule 502 and provides:

Limitation on manner of offering. Except as provided in Rule 504(b)(1), neither the issuer nor any person acting on its behalf shall offer or sell the securities by any form of general solicitation or general advertising, including, but not limited to, the following:

Any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio; and
Any seminar or meeting whose attendees have been invited by any general solicitation or general advertising;

Your Crowd funding can not be about offering shares of your business. Talk with your attorney on how
to structure it.