I. Basics of  LLCs

Independent filmmakers are busy people and often wear many hats. The producer of an independent film is often the person organizing the numerous tasks and people doing them to put a film together. To make sure he is not the one holding the bag for everything at the end of the production, the filmmaker needs a business organization that spells out who does what, who is responsible for paying for things, how those people are to work together, and under what circumstances they are to break up. The creative rush of working on a film sometimes has the effect of putting the business organization on the back burner, but this can have dire consequences. Like any group of people forming to do business, a film should have a formal business form, or the principals will be liable for all the debts of the project personally. If there is no business form registered, the participants will be treated and taxed as a partnership, with each partner liable for his or her divided share of the debts. A single person making a film will be treated and taxed as a sole proprietor, and will report film income and debts as his own, on his personal income tax form. The organization form which is the easiest and most suited for a film production involving a group of people is the Limited Liability Company, or LLC governed in Ohio by Ohio Revised Code Chapter 1705.[1]

An LLC can consist of a single owner or many members; it can be managed by the members themselves, or by an outside managing company that is not part of the LLC. This is all spelled out in the LLC’s operating agreement, the part of the Articles of Organization[2] which sets out not only the people who will be members of the LLC and what their role will be, but the contributions they will make to the company. It is essential to detail every aspect of the company and how it will be run in the operating agreement. This will help to avoid the necessity of the disagreeing members hashing out what they meant in a court setting, which can be very expensive. There are several helpful checklists in Blackford Business Organizations on Limited Liability Companies which will make sure the owner(s) do all that is required by law in the formation of the company. It sets out mandatory provisions of the Articles of Organization, such as the name of the company; its purpose; its duration, unless it is to be perpetual; its address, and statutory agent.[3] A film LLC may be formed for the production of a single film, and thus may have a limited duration with more detailed provisions in the event of the termination of the company. An LLC formed by a group of members to produce a number of films may have a perpetual duration and have more detailed rules for allocating profits and losses from the operation. One caveat for the formation of multiple LLCs for individual movies is that the companies must remain separate, with separate offices, bank accounts, recordkeeping, and expenditures. Any commingling of funds between multiple LLCs with the same or similar members may result in the voiding of the business form as a `sham’ or `shell’ company, which may allow creditors to go after the assets of the solvent LLC or even the alter ego of the company, the principal members. It may be tempting to share funds between solvent and insolvent films if one movie produced by the same group of people makes money and another does not, but in exchange for limiting the liability of the principals for debts of the company, strict recordkeeping and separate books are required to use the LLC form. If the company is sued for a personal injury or contract breach, the principals may end up being liable to the injured party if there is no real evidence that the LLC form has been complied with. To avoid being sued, the members or principals of an LLC comprising the film production itself should make sure all contracts with the participants, vendors, licensors and members are solid, clear, and not capable of being interpreted more than one way. Address all issues – make sure there are provisions for enforcement, recordkeeping and auditing. The contract elements of offer, acceptance, and consideration (some value or benefit given) should be clear in your releases for performers and crew. All the intellectual property used in your film (sounds and images) should be licensed or permission obtained for their use from the copyright or trademark holders. Copyright clearinghouses and music licensing companies and websites can be utilized to help with the clearances. This allows the filmmaker to obtain distribution and errors and omissions insurance as well.[4]  Also, possible tax liens and penalties could accrue if the LLC does not pay employment or other taxes incurred by the company’s activities. If there are employees paid salaries or wages, the filmmaker must deduct employment taxes, social security and disability insurance from their pay. The Screen Actors Guild contracts require such deductions, as well as payments to the  SAG-Producers Pension and Health Plans.[5]  Another checklist gives provisions that could be included in the Operating Agreement, but are not mandatory, such as management form; rights to transfer membership interests, allocation of profits, losses, gain and credits; voting requirements; dispute resolution procedures; specification of events that will cause dissolution of the company;[6] adoption of compliance, sexual harassment, non-discrimination and other policies, and a code of ethics; setting up of bank accounts; compensation plans; and what is to be done when a member dies or becomes incompetent.[7]

Records of the stated contributions are required to be kept by the company[8] and are usually provided in an attachment to the Operating Agreement. Each member’s contribution may be either in cash, property, services rendered, a promissory note, or any other binding obligation to contribute cash or property or to perform services; by providing any other benefit to the limited liability company; or by any combination of these.[9] A promise by a member to contribute to the limited liability company is not enforceable unless it is in writing signed by the member.[10] After promising to contribute to the LLC, the member is liable for that contribution even if the member is unable to perform the promise because of death, disability, or other reason. If the member is unable to contribute the promised property or services, the LLC has the option of compelling the member to contribute the cash value equal to the portion of the stated value of the contribution the member has failed to make.[11] Provisions about the contributions of members can include buy and sell arrangements and self-dealing rules for the members; establishment of a capital account for each member, and the method of accounting to be used to determine additions or subtractions from the capital account; and determination of the fair market value by members or managers if property other than cash is received.[12] The LLC also has other rights under Ohio law against the member who has failed to contribute what he promised to the LLC. However, by the consent of all the members, the failure of a member to make a promised contribution or to return money or other property paid or distributed in violation of the LLC laws may be compromised, unless otherwise stated in the operating agreement.[13] Filmmakers are creative people, who gather together with other friends and artists to make a movie, but things can get decidedly unfriendly if the duties and responsibilities of each participant are not spelled out. Filmmaking can be an expensive proposition, and even a small independent film can easily cost upwards of $100,000. The least amount of production expenditures spent in Ohio that will qualify the producers for the Ohio Film Tax Credit consideration is $300,000.[14] Rather than subjecting your house or other property to a lien for a film debt, a filmmaker should take the time to comply with the statutory and practical requirements of the Limited Liability Company form. It will be well worth it in the long run in making sure that debts or even the splitting of profits do not become an unnecessary concern.

II. Comparison of LLCs with other Business Entities: Financing and Securities Laws

Obtaining financing for your film is a daunting task, especially in this rough economy. If you do find an `angel’ to invest in your film, the type of business organization form you select will make a difference in how you receive the funds. Partnerships are the most common business form, and other forms, such as an LLC, with more than one member will revert to this model if statutory requirements are not met. The classic investor model for a Broadway production is a Limited Partnership, which allows for general (managing) partners and limited (non-managing investor) partners. In this form, the promoters are in charge, the limited partners are entirely passive. Promoters hire and organize things; limited partners give in their percentage of the funds and sit down! Of course, the tax treatment is different from an incorporated company, with each Partner being taxed on the individual level by his percentage of participation in the profits. The entity itself is not taxed as is the case with a corporation. A Limited Liability Partnership has general partners and limited partners who are liable for partnership debts and torts, but not for those of the individual partners not done in the name of the partnership or not caused by the Limited Liability Partnership.  The Limited Liability Partnership can be held liable for torts, injuries to persons or property caused by the partnership, and that includes civil rights violations and copyright and trademark infringement. Determining the type of organization you want for your film venture will depend on what kind of association the parties desire. A limited partnership may be suited to an investor who wishes to avoid the greater potential liability of a general partner and is willing to pay the price of giving up a say in management.[15]  A limited liability company may be best suited to a group of people who are pooling their labor and resources to make one or more movies, but do not want to put their individual residences and assets at risk.

Limited Liability Companies are a good form to use for films as long as you are diligent about your recordkeeping. Raising money for your film as part of an LLC has some extra concerns, since selling interests or memberships in an LLC or even in a Limited Liability Partnership most likely are going to be “securities” within the scope of both state and federal securities laws.[16] Any “offer to sell” (not just a completed purchase) of LLC memberships can put the transaction into the securities realm, which requires compliance with state and federal laws and regulations. Even if membership in a small member-managed LLC ought not to be seen as a security, any LLC membership interest that is solely for the purpose of investment is classified as a security. Ohio law explicitly mentions LLC memberships as securities in its definition of them.[17] Although Ohio Securities laws provide for exemptions to full compliance for offerings of LLC memberships, some exemptions must still be claimed in a filing with the Ohio Division of Securities, which must find by rule that registration is not necessary or appropriate in the public interest or for the protection of investors.[18] The most common reasons for exemption of an LLC membership as a security by issuers include a number of provisions involving smaller numbers of investors. The first under Ohio law allows an offering to ten or fewer purchasers[19].  This exemption requires that the total number of purchasers (or members, in the case of an LLC) in this state in one year does not exceed ten. It also requires that no advertisement, article, notice, or other communication be published in any newspaper, magazine or similar medium or broadcast over television or radio in connection with the sale, but the use of offering circulars delivered by the issuer to select individuals is allowed. The issuer must also reasonably believe after investigation that the purchaser is purchasing for investment. The exemption also limits any commission or other remuneration for sales, and that such commission is paid only to registered dealers or salespersons of securities registered under state law.[20] This exemption does not require a filing to perfect it, but an issuer should memorialize reliance of the LLC on this exemption in its company records.[21]

Another reason for exemption refers to the federal securities law, providing that section 5 of the Securities Act of 1933 do not apply to the sale by reason of an exemption under section 4 (2) of that act.[22] These are so-called “private offerings” under O.R.C. 1707.03(X) and the federal act, not involving a “public offering”, which thus prohibits any advertising or general solicitation, and also requires investment intent. A Form 3-Q must be filed with the Division within sixty days of the date of sale for this exemption to be valid, and the Ohio Administrative Code section 1301:6-3-03(B)(6) defines the date of sale. The offering must also comply with the conditions of Securities and Exchange Commission Rule 506, which among other things prohibits advertising and general solicitation, and limits the number of purchasers to thirty five “accredited” investors, which under SEC Rule 501, are directors, executive officers, or general partners of the issuer, or has a very high net worth of over 1 million dollars. Non-accredited investors, which the rule allows in unlimited numbers, are required to be “sophisticated”, and disclosure documents must be delivered to them. Out of state issuers have additional filing requirements under Ohio law.[23] Private offerings under O.R.C. 1707.03(W) have the same investor requirements as that of section (X), and are limited to $5 million under SEC Rule 505. A filing fee of $100.00 must be included with form 3-W and sent to the Division of Securities within five business days prior to the first use of an offering document or the first sale in Ohio.[24] This exemption also has a “Bad Boy” provision, which disqualifies any issuer or broker-dealer which would be prohibited from using the exemption because of convictions for fraud or securities violations.[25] Lastly, under O.R.C. 1707.02(G), private offerings of commercial paper and promissory notes that are not offered directly or indirectly to the public are exempt from registration.  O.A.C. 1301:6-3-02 defines private offering and details other exempt securities, including those of commercial paper and promissory notes.[26] You can see from the requirements of the private offerings exemption that the purpose of the securities laws is to safeguard smaller investors who do not have a lot of money to lose, as an `accredited’ investor does. They are also designed to allow an exemption for an investor who is `accredited’ because of being a director, executive officer or general partners of the issuer, because he or she has a hand in the management of the LLC and its assets personally.

III. LLC Financing and Securities Fraud – a Case Study

If somehow your film LLC membership offerings still do not come under any state or federal exemption, or you do not want to go through the filings and notifications required for the exemptions, you could run into some real trouble. A recent case involving the selling of film company LLC memberships outlines the tests that courts use to determine whether an offering is a security, aside from any possible exemptions. United States v. Leonard, [27] held that in determining whether LLC memberships were `securities’ requiring registration under state and federal securities laws, a “totality of the circumstances” test should be used, rather than a literal reading of the LLC’s organizational documents. A “case-by-case” analysis of the “economic realities” of the transaction underlying the transfer of the LLC interests was required. In the Leonard case, sellers of interests in companies formed to finance the production and distribution of motion pictures were convicted of criminal conspiracy, mail fraud and securities fraud. Their independent sales office (ISO) contacted investors by phone and sent them offerings by mail which included a brochure, operating agreement, subscription agreement, risk disclosure sheet, and instruction sheet. The information contained in the offerings was ruled to be material misrepresentations of fact under the federal securities law. The sellers were found to have intended to deceive the investor “members” that their money would be spent on pre-production, rather than on sales commissions. The offering materials did not reflect the hefty commissions of 45% taken by the ISO, but seemed to indicate that the commissions would be no more than 20% of the unit price.[28]

The sellers’ appeal turned on the issue of whether the LLC memberships offered by the sellers were “securities”. Their argument was based on the organizational documents of the LLC, which would by a literal reading lead the court to believe that the members were expected to play an active role in the management of the film companies. In the organization documents, the members’ managerial and voting rights, did not accrue until the LLCs were “fully organized”, and so-called “interim managers” initially held legal control rights, deciding almost every single significant issue prior to the completion of fundraising – the script, the director, the casting and crew, the scoring, and even the editing of the picture. The vast majority of the investor “members” did not actively participate in the ventures, exercising almost no control. In fact, the members solicited to invest in the film venture had no particular experience in film or entertainment, and would have had difficulty taking over their formal managerial rights in the companies after they were fully organized. The court found that the managerial rights recited in the organization documents were hollow and illusory. The court cited the case of SEC v. Aqua-Sonic Prods. Corp.,[29]  distinguishing between companies that seek the “passive investor” and situations where there is a reasonable expectation of “significant investor control.”[30] The court in Aqua Sonic stated that the securities laws were enacted for the benefit of the passive investor, and that where there was a reasonable expectation of investor control, the protection of the 1933 and 1934 Acts[31] would be unnecessary.[32]

Witnesses testified in the Leonard case that the LLCs were structured to minimize the possibility that the memberships would be seen as securities, with the summary sheet sent to potential investors reciting that the memberships were not passive investments, and that although motion picture expertise was not required, members should have such general business, financial, and investment experience as to intelligently exercise their managerial and voting rights. In actuality the members played an extremely passive role in the management and operation of the companies. At trial, members testified that they voted, at most “a couple of times.”[33] The members did not appear to have negotiated any terms of the LLC agreements, but rather were presented with the subscription agreements on a “take-it-or-leave-it” basis. The court concluded that despite the organizational documents drafted to suggest active participation by members, the defendants sought and expected passive investors for their movie companies, and therefore the interests they marketed constituted securities. The Second Circuit Court of Appeals affirmed the convictions of the sellers for fraud under the federal securities laws for their material misrepresentations to the investors. Although they deferred to the District Court’s determination that the investors would not have purchased the investment had they known that 45% of the sales price went to commissions, they remanded the case for recalculation of the value of the securities for restitution purposes, reasoning that the investment may not have been entirely without value.[34]

The Leonard case is the latest in a line of cases which have attempted to define what kind of interests constitute securities, and especially the relatively new type of interest in an LLC. The key in most of the cases hinges on the control actually exercised by the members, and not just what is purported by the offering and organizational documents. An investment contract constituting a security under the Securities Act is one in which a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.[35]  There are at least two cases in which LLC interests were not found to be securities because of the control retained over the enterprise by the members.[36] With a small film LLC where the members all exercise managerial control and help form the bylaws and organizational documents of the company, there should not be any question that the membership interests are not securities. It is when outside investors are solicited and buy into the company that the elements of a security are present; in that case, the several exemptions for small or private offerings in an LLC mentioned earlier should be claimed by the promoters of the movie venture.

© 2011 Mary Ellen Tomazic

Wealthy patrons have been a godsend to artists, musicians, writers and other creators for centuries. The commissioning of Michelangelo to paint the Sistine Chapel, the portraits and sculptures done for royalty and others allowed many famous artists to pursue their creativity full time. Individual benefactors have been counted on to provide a living wage to the artistic community, and this model continues to this day, with Broadway “Angels”, big investors underwriting new companies, and business forms for films that allow for “private offerings” of a limited amount of shares in the film.[1] The traditional and most oft-used development process for films is still begging and borrowing funds from friends and family, since federal and state securities laws have prevented any wider solicitation of the general public. The laws and rules are designed to protect so-called “passive” investors, especially the less-sophisticated and less wealthy, from fraud, and provide both civil and criminal punishments under federal and state law.[2] Independent filmmakers in particular, weary of the money crunch, have wished for a way to fund their film other than taking out a mortgage on their home. They need not only wealthy angels, but a way to reach out to not-so-wealthy angels who believe in their project and want to help out monetarily.

There were already exemptions in the Securities Laws to allow for certain types of small offerings to accredited or sophisticated investors, and limit participation by non-accredited, or less sophisticated investors. State and federal laws provide that limited private offerings (less than 35 investors in Ohio) may be transacted without regular registration with the SEC or Ohio Securities Commission.[3] However, any private placement of offerings through the internet has been extremely limited under former law, leading people who wanted to use the internet to construct platforms for funding that did not involve sales of shares in a project, company, film, or musical album. There was no real way to raise capital by publicly selling small amounts of securities to a large number of random people over the internet, due to restrictions in the law on the type of investor solicited.

The convenience and expedience of the internet in reaching a broad swath of people around the world led to ideas for finding new patrons, maybe not so wealthy, to help fund big projects such as musical albums, films, inventions, and artworks. Sites began to pop up in the late nineties that allowed many people to pledge smaller amounts that combined together would bankroll projects in art, music, films and even businesses, usually with new inventions or products. Many of these sites were straight donation sites, some like Kickstarter a for-profit company that takes five percent of the pledges as their fee.[4] Sites that offer straight philanthropy as a nonprofit 501(C)(3) company, supporting a charity or cause are not subject to SEC requirements as such; they are governed by federal tax laws. Some for-profit companies that solicit funds through pledges have procedures that get around the federal and state securities laws, since pledgers are not buying a piece of the project, and the offeror does not own an interest in the project; pledgers are promised various prizes and premiums as tangible mementoes for their donation. A band may offer their new CD that was funded through the site, filmmakers a DVD copy of their movie, or restauranteurs a permanent seat at their restaurant that received funding. This can lead to unforeseen problems with fulfillment of the prize promised, such as when the cost of sending out five thousand CDs or DVDs may not have been calculated into the funding request. Also, Kickstarter’s requirement of giving something of value can get a bit persnickety, with the overseers asking for “cool” rewards for project pledgers, and sometimes seemingly selecting projects based on their entertaining video or the promise of an unusual reward, rather than the viability of the project.

New federal legislation signed last year by President Obama amended the SEC rules for share offerings, and now will allow funding of businesses and projects through solicitation of the general public online. The new securities law, entitled “Jumpstart Our Business Startup Act” is aimed at entrepreneurs and startup businesses that are unable to get traditional financing. Title III of that Act is entitled the “Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act of 2012”, or the “CROWDFUND Act”.[5] Though exempted from the SEC’s strict rules for the sale of securities, the Act has its own requirements intended to prevent fraud on investors. The issuer of shares in a project or company, which are considered “securities” under the law, is limited to an aggregate amount of no more than $1,000,000 in sales to all investors during a twelve month period. The amounts of the transactions are tied to the investor’s annual income, as a further fraud prevention provision, and to make sure they do not sink too much of their income into a venture. The aggregate sold to any investor may not exceed the greater of $2000 or five percent where the annual income or net worth of investors is less than $100,000, and less than 10% of an investor’s net worth of $100,000 or more.

The last requirement is that the transaction must be conducted through a broker or funding portal that complies with the requirements of the Act.[6] The Funding Portal Regulation in Sec. 304 of the Act states that the SEC shall by rule exempt funding portals from the requirement to register as a broker or dealer, as long as the portal remains subject to the rulemaking, examination, and enforcement authority of the SEC. A funding portal, as defined by the SEC, is “any person acting as an intermediary in a transaction involving the offer or sale of securities for the account of others, … that does not (A) offer investment advice or recommendations; (B) solicit purchases, sales or offers to buy the securities offered or displayed on its website or portal; (C) compensate employees, agents, or other persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal; (D) hold, manage, possess or otherwise handle investor funds or securities; or (E) engage in such other activities as the Commission, by rule, determines appropriate.”[7]

The law itself already has a great amount of detail about what will be required of “intermediaries” or “funding portals”, including a streamlined registration with the SEC, disclosures regarding risks and other investor education material to make sure the investor understands “the level of risk generally applicable to startups emerging businesses, and small issuers; … the risk of illiquidity; and other matters as the Commission determines appropriate by rule (.)”[8]The funding portals are given an exemption from registering as a broker, though they still have some registration requirements, and remain subject to the examination, enforcement, and other rulemaking authority of the Commission.[9]

Although the law is to be implemented with  reference to levels of income of investors and other personal information, the new law requires brokers or intermediaries to protect the privacy of information collected from investors, and there is a prohibition against the intermediaries compensating “promoters, finders or lead generators for providing the broker or funding portal with the personal identifying information of any potential investor”. The portals also are prohibited from having a financial interest in an issuer using its services, and like the existing funding websites like Kickstarter which are based on donations to fund the project, they are only to release the offering proceeds to the issuer when the capital raised from all investors equals or exceeds the target offering amount, and must allow all investors a chance to cancel their commitments to invest.[10]

The Crowdfunding Act also has requirements for issuers of the securities, the startups or other companies offering equity in their projects or companies. Rules are to be promulgated relating to background and securities enforcement regulatory history checks on officers and the larger equity owners of every issuer whose securities are offered to the public. It requires issuers to file numerous financial documents such as tax returns, business plans, and independent review by an accountant for higher target offering amounts. Of course, the Commission wants to know about the project, the target amount to be offered in securities, the deadline to reach the amount, the price to the public, or the method for determining the price. There are restrictions on advertising the terms of the offering, limiting it to notices which direct investors to the funding portal or broker.[11] This could be more difficult than it seems for projects such as filmmaking, since it would require the producers to have all their tax and financial information already before the offering. Forming an LLC for filmmaking generally, instead of for individual films, may suit this type of fundraising best; since the company of the issuer would already be in place when the SEC rules are adopted, the producer would not have to generate all the documents required for the SEC while trying to make a movie. The formation of an all-inclusive organization for filmmaking may also serve another goal in making a series of films, which could then be protected by a trademark registered for the series.[12]

Such involved requirements hardly seem like much of a loosening of the SEC’s securities issuing rules, and some of them seem like they would wind up being almost as complex and expensive as a regular stock offering. But the purpose of the Securities and Exchange Commission is to help investors avoid fraudulent schemes and ensure the stability and reliability of American commerce, and they are not giving up that mission for crowdfunding. There is concern that there will be a lot of unsophisticated investors and unsophisticated issuers in selling stock and other securities over the internet directly to the public. The JOBS Act which contains the Crowdfunding legislation is meant to encourage economic growth and remove some roadblocks to accessible funding for innovators and creators. The combination of these two concepts with some give and take by the regulators can help get inventions produced, businesses started, and can be the “angel” that filmmakers have yearned for to help them get the word out about their project to the masses online, and to help defray some of the massive costs of making a movie.

Unfortunately, the celebrations and capital-raising can’t begin just yet. Although the law itself is very specific in its provisions, no one can legally create funding portals or issue securities until the Commission promulgates its crowdfunding rules, and they are adopted by Congress. Every part of the law has a proviso giving the Commission the last word on how the law will work, “as the Commission, by rule, may determine appropriate”, so the exact provisions and how they will work is now known yet. The new law states that the Commission shall issue rules to carry out the new laws within 270 days after the date of enactment, which would have been by the first week of January, 2013. As of this writing on January 31^st, 2013, the SEC has run into a few snags in issuing the new regulations, and as a result, startup businesses, entrepreneurs and filmmakers will not be able to go to funding portals with their projects until possibly the last quarter of 2013 or the first of 2014.

A lot of work has gone into the enacting of the regulations, with representatives of current funding sites such as RocketHub and IndieGoGo, two donation-based crowdfunding services, being asked to provide information on their operating practices because of the dearth of data for analyzing equity crowdfunding.[13] However, there are several circumstances that are holding up the work. First, SEC Chairman Mary Schapiro has resigned and several of her top deputies who managed the writing of regulations went with her, leaving a staffing void. In addition, the Congress has not been diligent in confirming a fifth SEC commissioner to break the party split on the current four member Commission. In addition, there must be a 90 day comment period on proposed rules before the regulations can be finalized and put to a vote.[14]

The delays are frustrating to the intermediaries, the funding portals that must be used to sell stock, as their capital may run out before the market structure is in place, and they can start offering crowdfunding services for issuers. Entrepreneurs who have tired of waiting for the new regulations have turned to alternatives like peer-to-peer lending and royalty-based financing deals.[15] The intermediaries want to make sure they face less scrutiny from regulators than broker-dealers do, if their ventures are to be worthwhile for them to operate. Requirements for background checks and verification of investor limits in the law seem severe, but the subjects of the regulations are small businesses, startups, films, and other notoriously risky investments, so the SEC wants to be careful in such dangerous waters.

Crowdfunding industry associations, experts and lobbyists are now working with the SEC in their task of developing rules to implement the new capital raising process. In the last week of January 2013, Financial Industry Regulatory Authority (FINRA) invited prospective crowdfunding portals to voluntarily file an interim funding portal form. Another group, The Crowdfunding Intermediary Regulatory Advocates (CFIRA) and its sister organization the Crowdfunding Professional Association (CfPA) have reviewed FINRA’s form and are optimistic about the progress that has been made, and both organizations fully support the voluntary request for information.[16] The SEC’s approval of FINRA’s form would help move the rulemaking process forward, and cooperation among the industry leaders and the government should facilitate a responsible economic model. Watch for an announcement of the new crowdfunding regulations to come in late summer or early fall 2013.

© 2013 Mary Ellen Tomazic