H. R. 3606—9 
that purchasers of the securities are accredited investors, using 
such methods as determined by the Commission. Section 
230.506 of title 17, Code of Federal Regulations, as revised 
pursuant to this section, shall continue to be treated as a 
regulation issued under section 4(2) of the Securities Act of 
1933 (15 U.S.C. 77d(2)). 
(2) Not later than 90 days after the date of enactment 
of this Act, the Securities and Exchange Commission shall 
revise subsection (d)(1) of section 230.144A of title 17, Code 
of Federal Regulations, to provide that securities sold under 
such revised exemption may be offered to persons other than 
qualified institutional buyers, including by means of general 
solicitation or general advertising, provided that securities are 
sold only to persons that the seller and any person acting 
on behalf of the seller reasonably believe is a qualified institu-
tional buyer. 
(b) CONSISTENCY IN INTERPRETATION.—Section 4 of the Securi-
ties Act of 1933 (15 U.S.C. 77d) is amended— 
(1) by striking ‘‘The provisions of section 5’’ and inserting 
‘‘(a) The provisions of section 5’’; and 
(2) by adding at the end the following: 
‘‘(b) Offers and sales exempt under section 230.506 of title 
17, Code of Federal Regulations (as revised pursuant to section 
201 of the Jumpstart Our Business Startups Act) shall not be 
deemed public offerings under the Federal securities laws as a 
result of general advertising or general solicitation.’’. 
(c) EXPLANATION OF EXEMPTION.—Section 4 of the Securities 
Act of 1933 (15 U.S.C. 77d) is amended— 
(1) by striking ‘‘The provisions of section 5’’ and inserting 
‘‘(a) The provisions of section 5’’; and 
(2) by adding at the end the following: 
‘‘(b)(1) With respect to securities offered and sold in compliance 
with Rule 506 of Regulation D under this Act, no person who 
meets the conditions set forth in paragraph (2) shall be subject 
to registration as a broker or dealer pursuant to section 15(a)(1) 
of this title, solely because— 
‘‘(A) that person maintains a platform or mechanism 
that permits the offer, sale, purchase, or negotiation of 
or with respect to securities, or permits general solicita-
tions, general advertisements, or similar or related activi-
ties by issuers of such securities, whether online, in person, 
or through any other means; 
‘‘(B) that person or any person associated with that 
person co-invests in such securities; or 
‘‘(C) that person or any person associated with that 
person provides ancillary services with respect to such secu-
rities. 
‘‘(2) The exemption provided in paragraph (1) shall apply to 
any person described in such paragraph if— 
‘‘(A) such person and each person associated with that 
person receives no compensation in connection with the pur-
chase or sale of such security; 
‘‘(B) such person and each person associated with that 
person does not have possession of customer funds or securities 
in connection with the purchase or sale of such security; and 
‘‘(C) such person is not subject to a statutory disqualifica-
tion as defined in section 3(a)(39) of this title and does not
H. R. 3606—10 
have any person associated with that person subject to such 
a statutory disqualification. 
‘‘(3) For the purposes of this subsection, the term ‘ancillary 
services’ means— 
‘‘(A) the provision of due diligence services, in connection 
with the offer, sale, purchase, or negotiation of such security, 
so long as such services do not include, for separate compensa-
tion, investment advice or recommendations to issuers or inves-
tors; and 
‘‘(B) the provision of standardized documents to the issuers 
and investors, so long as such person or entity does not nego-
tiate the terms of the issuance for and on behalf of third 
parties and issuers are not required to use the standardized 
documents as a condition of using the service.’’. 
TITLE III—CROWDFUNDING 
SEC. 301. SHORT TITLE. 
This title may be cited as the ‘‘Capital Raising Online While 
Deterring Fraud and Unethical Non-Disclosure Act of 2012’’ or 
the ‘‘CROWDFUND Act’’. 
SEC. 302. CROWDFUNDING EXEMPTION. 
(a) SECURITIES ACT OF 1933.—Section 4 of the Securities Act 
of 1933 (15 U.S.C. 77d) is amended by adding at the end the 
following: 
‘‘(6) transactions involving the offer or sale of securities 
by an issuer (including all entities controlled by or under 
common control with the issuer), provided that— 
‘‘(A) the aggregate amount sold to all investors by 
the issuer, including any amount sold in reliance on the 
exemption provided under this paragraph during the 12- 
month period preceding the date of such transaction, is 
not more than $1,000,000; 
‘‘(B) the aggregate amount sold to any investor by 
an issuer, including any amount sold in reliance on the 
exemption provided under this paragraph during the 12- 
month period preceding the date of such transaction, does 
not exceed— 
‘‘(i) the greater of $2,000 or 5 percent of the annual 
income or net worth of such investor, as applicable, 
if either the annual income or the net worth of the 
investor is less than $100,000; and 
‘‘(ii) 10 percent of the annual income or net worth 
of such investor, as applicable, not to exceed a max-
imum aggregate amount sold of $100,000, if either 
the annual income or net worth of the investor is 
equal to or more than $100,000; 
‘‘(C) the transaction is conducted through a broker 
or funding portal that complies with the requirements of 
section 4A(a); and 
‘‘(D) the issuer complies with the requirements of sec-
tion 4A(b).’’. 
(b) REQUIREMENTS TO QUALIFY FOR CROWDFUNDING EXEMP-
TION.—The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended 
by inserting after section 4 the following: