Pennsylvania Secretary Wiessmann Advises Investors to be Well-Informed on Equity Crowdfunding

HARRISBURG, Pa., July 20, 2016 /PRNewswire-USNewswire/ -- The PA Department of Banking and Securities has issued new guidance for investors on equity crowdfunding, a new way for start-ups and small businesses to offer ownership shares for sale over the Internet.

Under new U.S. Securities and Exchange Commission rules, start-ups and businesses can raise up to $1 million in a 12-month period from individual investors, who can invest up to $2,000 in a 12-month period but no more than $100,000, determined by their income and net worth. Individuals can invest directly or through an intermediary, such as a broker-dealer or a "funding portal." The guidance is located on the department's website: www.dobs.pa.gov/Documents/Publications/Handouts/Investor-Crowdfunding%201P.pdf

"Online equity crowdfunding allows investors to tap into the collective 'wisdom of the crowd' and allows businesses to reach a lot more people over the Internet," Secretary of Banking and Securities Wiessmann said. "Investors need to keep in mind that all investments have risk, especially small business and start-ups."

Wiessmann urges investors to pay close attention to a company's finances, its timelines and strategies, capitalization, and experience and skills of management.

"While crowdfunding opens new capital raising opportunities, investors should perform due diligence on investment opportunities they learn about over the Internet," Wiessmann continued. "When you see an offering on the Internet — whether on a funding portal, in an online newsletter, message board or chat room — you should investigate before you invest." 

The department will be sharing information on crowdfunding and equity crowdfunding for the next week on Facebook and Twitter.

Members of the public can contact the Department of Banking and Securities consumer helpline (1-800-PA-BANKS) to file a complaint or ask questions about financial products, transactions, or companies. Consumers and businesses can learn more at www.dobs.pa.gov, and are also invited to connect to the department's outreach efforts by following us on Facebook and Twitter or subscribing to the department's newsletter.

Media contact: Ed Novak, 717-783-4721

SOURCE Pennsylvania Department of Banking and Securities

Related Links

http://www.dobs.pa.gov