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Can I use crowdfunding to raise money without violating securities laws in Maryland? What are the requirements?

Requirements for Crowdfunding in Maryland

To use crowdfunding to raise money in Maryland, you must comply with the state and federal securities laws. The Securities Division of Maryland regulates the offer and sale of securities in the state [1].

Under the federal National Securities Markets Improvement Act of 1996, investment advisers and their representatives must register with the Securities Division [1]. The JOBS Act of 2012 created a federal exemption for crowdfunding offerings, which allows companies to raise capital through securities offerings using the internet [2].

To use crowdfunding in Maryland, you must comply with the requirements of the Securities Act Section 4A(b) and the related requirements in Regulation Crowdfunding [4]. You must also comply with Rule 504 of Regulation D under the Securities Act to facilitate issuers’ capital raising efforts [5].

Before investing in a crowdfunding offering, it is important to investigate the offering and comparison shop. Most crowdfunding offerings involve a substantial investment, so it is recommended to seek competent legal advice before investing. Have a lawyer review the contracts or agreements before you give the seller any money [3].

In summary, to use crowdfunding to raise money in Maryland, you must comply with the state and federal securities laws, including the requirements of the Securities Act Section 4A(b) and the related requirements in Regulation Crowdfunding, and Rule 504 of Regulation D under the Securities Act. It is also recommended to seek competent legal advice before investing in a crowdfunding offering [1][2][3][4][5].

Source(s):
Jurisdiction

Maryland