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The Role of Structured Data in SEC's New Crowdfunding Requirements

Lou Rohman, Vice President, XBRL Services, Merrill Corporation | May 26, 2016

It wasn’t that long ago that I got my first invite to contribute to a Kickstarter crowdfunding campaign. Now, this innovative fundraising model is SEC-sanctioned. Earlier this month, the SEC’s new crowdfunding rules went into effect, allowing companies to offer and sell securities to the investing public via crowdfunding portals. These rules aim to make it easier for small companies to raise capital, while giving better protection to investors of these upstarts. This landscape is just taking shape, but it’s clear to me that XBRL tagging could play a key role.

Using XBRL to meet new disclosure requirements

I’ve got my eye on the rule requiring companies seeking capital to disclose their financial information to potential investors — as well as the crowdfunding portals, so that these vendors can protect themselves from fraud. This disclosure requirement presents an ideal use case for XBRL data. As XBRL data quality continues to increase, structured data disclosures will give investors and crowdfunding portals a consistent and cost-effective way to evaluate crowdfunding projects — and add needed legitimacy and trust to this new fundraising format.

Free forum explores SEC crowdfunding rules

Whether you work for a company looking to leverage crowdfunding, a potential investor, an analyst, a regulator or are otherwise involved in the FinTech or investment worlds, I recommend attending a free forum hosted by XBRL US. The June 28 forum will explore this new world, how it will impact global capital markets, and how the various players can best navigate the evolving landscape.

Key sessions on XBRL, Blockchain

I look forward to hearing from XBRL US President and CEO, Campbell Pryde, at the upcoming forum. Campbell will share his insights on the role of XBRL in crowdfunding disclosures, and make a familiar call for improving XBRL data consistency and quality.

I’m also planning to attend a session on the use of blockchain technology within the crowdfunding arena. Using a distributed-ledger technology like blockchain can cut out this “middleman” and put more capital in the small company’s pocket. If you’re unfamiliar with blockchain, or curious about its application within crowdfunding, check out the afternoon session of the June 28th forum.

Sign up. Learn more. I hope to see you there.


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