Hastings Business Law Journal


Shekhar Darke


The recently enacted JOBS Act created crowdfunding exemption to securities registration, allowing entrepreneurs to raise capital for their ventures from everyday investors. The crowdfunding exemption has many stipulations such as a maximum investment and offering amounts within a given period. Also, investors can only invest in crowdfunding opportunities through intermediaries that are registered as broker-dealers or funding portals. The JOBS Act created funding portal registration as an easier alternative to the more burdensome broker-dealer registration. Thus, many people believe that crowdfunding platforms will opt to register as funding portals. However, this note argues that crowdfunding platforms would rather choose broker-dealer registration because broker-dealer registration provides more revenue opportunities, flexibility, versatility, and regulatory clarity.