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Kansas and Georgia Beat the SEC on Crowdfunding Rules. Now Others Are Trying

Equity crowdfunding is legal in Kansas. Where's the crowd?
Equity crowdfunding is legal in Kansas. Where's the crowd?Photograph by Tier Images

It’s been more than a year since President Obama signed the JOBS Act into law, and the Securities and Exchange Commission has yet to finalize rules that would allow companies to sell shares over crowdfunding platforms. Often overlooked amid speculation about when the SEC will conclude its rulemaking process: equity crowdfunding to nonaccredited investors is already legal under certain conditions in two states.

In March 2011, the Kansas Securities Commission adopted the Invest Kansas Exemption, which allows companies formed in Kansas to raise up to $1 million from nonaccredited investors, so long as they’re state residents. In November of the same year, Georgia adopted a similar rule. So why haven’t you heard more about these exemptions? Probably because hardly anyone is using the not-so-new rules to crowdfund.