Regulation Crowdfunding

A representative describes an issuer's Regulation A offering, marketed partly through an online investment portal, as "basically the same thing as equity crowdfunding." Is this an accurate characterization?

1. A.Yes, "crowdfunding" is simply informal industry slang for any offering marketed online to numerous small investors, so the two regimes are the same rule under different names.Wrong. This treats a marketing channel similarity as regulatory equivalence.
2. B.Yes, because Regulation A was specifically created as the SEC's formal implementation of equity crowdfunding, replacing what used to be called Regulation Crowdfunding.Wrong. Regulation A and Regulation Crowdfunding are separate, coexisting rules; one did not replace the other.
3. C.No, but only because Regulation A offerings can never be marketed through any online platform or portal, unlike Regulation Crowdfunding offerings.Wrong. Regulation A offerings can be, and often are, marketed through online platforms; that is not the actual distinguishing feature.
4. D.Not accurate -- the two are separate exemptions with different rules, ceilings, and requirements, regardless of the online marketing channel used.Correct. Marketing channel does not determine which exemption governs the offering.

Why: Not accurate as a regulatory matter. Regulation A and Regulation Crowdfunding are separate exemptions with different rules, different dollar ceilings, and different issuer and investor requirements. A Regulation A offering being marketed through an online portal does not make it a Regulation Crowdfunding offering.

A platform hosts both a Regulation Crowdfunding offering and a Rule 506(b) private placement side by side, and freely advertises both to the general public in the same campaign. Is this consistent with each offering's marketing rules?

1. A.Yes, because both are exempt offerings and therefore share the same marketing limitations.Wrong. Regulation Crowdfunding and Rule 506(b) impose different marketing rules; being exempt from registration does not mean the marketing rules are identical.
2. B.No, for the Reg CF offering only, because Regulation Crowdfunding prohibits general solicitation entirely.Wrong. Regulation Crowdfunding permits general advertising of the offering's terms, subject to its own conditions; it does not prohibit general solicitation.
3. C.No, for the Rule 506(b) offering only, because Regulation Crowdfunding permits general advertising while Rule 506(b) does not.Correct. The identical public advertising is fine for the Reg CF raise but breaches Rule 506(b)'s marketing limits for the private placement.
4. D.Yes, provided the platform discloses which offering each advertisement pertains to.Wrong. Labeling which deal is being advertised does not cure the fact that the Rule 506(b) offering was publicly advertised at all.

Why: Regulation Crowdfunding permits general solicitation and advertising of the offering, subject to its own content and platform conditions, while Rule 506(b) does not permit general solicitation at all. Advertising both offerings identically to the public is consistent with the Reg CF raise but breaches the marketing limits governing the 506(b) raise, because the two exemptions rest on opposite premises about public marketing.