SEC Opens Door to Securities Crowdfunding - NBC4 Washington

SEC Opens Door to Securities Crowdfunding

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    The U.S. Securities and Exchange Commission (SEC) building in Washington, DC.

    A new form of crowdfunding is coming soon that will allow startups to raise money by selling stock to Main Street investors.

    The Securities and Exchange Commission on Friday adopted rules implementing a 2012 law that opened the door to securities crowdfunding. The vote was 3-1 at a public meeting.

    For investors, it's a chance to make a small profit and possibly get in early on the next Twitter, Instagram or Uber.

    But it's also risky, given that a majority of startups fail. About half of all small businesses shut down within the first five years. Some critics also warn that investment crowdfunding is ripe for fraud.