WHAT KIND OF RESTRICTIONS ARE IN EFFECT IF AN INVESTOR WISHES TO RESELL HIS OR HER INVESTMENT?

The investor in a crowdfunding offering cannot immediately resell, but is subject to significant limits on resale. Resales can be made only after one year, unless the security transferred to an accredited investor (generally, one with high income and asset limits) as part of an offering registered with the SEC, or to a family member of the investor or in connection with his or her death or divorce.

Regulation CF doesn’t address what restrictions might be upon the subsequent purchaser. But, based on similar provisions in other regulations, it would be assumed that after the one year restriction, the investment could be resold without any restriction at all as long as the holder wasn’t an officer, director, or significant shareholder (in other words, an “affiliate”) of the company that issued the securities.