Proposed federal rules cover crowdfunding platforms

The FINANCIAL — The Securities and Exchange Commission (SEC) and Treasury, the U.S. Treasury, has proposed new privacy rules intended to protect the personal information that is typically stored by crowdfunding platforms from being…

Proposed federal rules cover crowdfunding platforms

The FINANCIAL — The Securities and Exchange Commission (SEC) and Treasury, the U.S. Treasury, has proposed new privacy rules intended to protect the personal information that is typically stored by crowdfunding platforms from being used in scams.

Specifically, the proposed rules change the definitions of “personal information” and “potential misleading personal information” that can be shared with another person in an offer or request. This includes information like a listing of the platform operator, a listing of key personal information, payment information or the offers and solicitations in or made by its offerings.

The S.E.C. defines personal information as the personal characteristics for which people provide personal identification information or consent to share personal information. As outlined in Rule 49, it is prohibited to share information in an offering solicitation to a prospective buyer unless the investor consents to this sharing.

The SEC and Treasury announced this proposed rule change as part of the Securities of Crowded Offerings Study Act, as amended, and subsequent proposed rule changes designed to promote crowdfunding. This draft rule change also addresses two other areas: Rule 506 reviews and the creation of crowdfunding portals.

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