SEC discusses crowdfunding rule

The U.S. Securities and Exchange Commission began discussion Wednesday to consider a proposal that would allow businesses to sell ownership stakes in their companies through crowdfunding.

The move is a  requirement of the 2012 federal Jumpstart Our Business Startups – JOBS – Act that relaxes federal regulations to help spur small business growth, according to a report from Reuters.

If adopted by the five-member board, the rule shift would allow small businesses to raise more than $1 million a year from unaccredited investors. Currently only accredited investors – which the SEC deems as having a net worth of $1 million, excluding the value of their homes, or an individual annual income of more than $200,000 – are allowed to solicit companies.

Reuters reports the move means companies could sell stakes to mom-and-pop investors without registering the securities with the SEC.

The SEC proposal would require crowdfunding portals to provide investors with educational materials and companies to make some disclosures, such as about offices, financial statements and how the proceeds will be used.

Read more from Reuters.