Michigan Governor Set to Sign First Ever Intrastate Secondary Securities Market Bill

act_now Michigan

First State to Create Secondary Market for Privately Crowdfunded Securities.

Tired of waiting on federal regulators to implement investment (aka equity) crowdfunding for all investors, several Midwestern states, including Michigan, have legalized intrastate investment crowdfunding. Now, with the pending passage of HB 5273, Michigan’s effort to stay on the cutting edge of investment crowdfunding will make it the first state to legalize the creation of a secondary market for privately crowdfunded securities which would give investors a great incentive to contribute capital to innovative small businesses.

On October 7, HB 5273 was presented to the governor’s office, and it is expected he will sign it into law shortly. The bill allows broker-dealers to sell Michigan securities on the secondary market and would be the first of its kind in the country. In essence, investors who have equity ownership in Michigan businesses will be able to sell their shares on this secondary market, the lack of which is sometimes considered a hindrance to attracting capital.

Nancy JenkinsCrowdfund Insider reported back in March of 2014 that Representative Nancy Jenkins, a staunch investment crowdfunding advocate, was introducing new legislation to address the liquidity challenge of investing in early stage companies.  This new bill was seen as complimenting the crowdfunding legislation signed into law by Governor Snyder in January 2014.

The new legislation would add a new article to the existing Uniform Securities Act that will provide for regulation of intrastate securities market or exchange.  The bill analysis is embedded below.

Joe EliasJoe Elias, COO of Michigan based Loquidity intends on using the new intrastate exemption to raise capital.  Loquidity is currently the only Michigan based investment crowdfunding platform and the founders have been intimately engaged with the new laws.  Elias commented on the expected signing of the bill;

“Michigan’s secondary private securities market will create a “free” market between Michigan business and Michigan residents and inspire more investors to participate in intrastate deals. Time will tell how this secondary market will manifest itself in the next couple of years. Loquidity will help the fruition of the secondary market by building up the primary market through offering more MILE Act investments in Michigan, giving our communities more access to capital and wealth-creating opportunities.”

Earlier in the year Dan Gilmartin, CEO and executive director of the Michigan Municipal League stated; “Making these cutting-edge local investment opportunities a reality would send an amazing ‘Michigan is pro-business’ message to entrepreneurs throughout the world.”

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