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Attorney Brian Peykar With heightened reward comes heightened risks, writes Peykar.

ROSELAND, NJ—The internet and social media has brought the concept of crowdfunding to the masses. Essentially, crowdfunding enables a collection of individuals to invest small to large amounts of money to fund large scale projects, which can include such projects as the purchase of a multifamily housing project or a film.

For over 80 years, developers and investors alike have been limited by provisions of the Securities Act of 1933; which enforced stringent regulations on the advertisement and sale of securities to the public. Well, not anymore. In 2012, Congress enacted the JOBS Act (Jumpstart Our Business); which is a law intended to encourage funding of United States small businesses by easing various securities regulations. Title III of the JOBS Act created a federal exemption under the securities laws so that this type of funding method can be used to offer and sell securities.

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