SEC: Unleash the crowdfunders

August 29, 2012, 11:44 PM UTC

FORTUNE — After some delay, the Securities and Exchange Commission today proposed rules that could help unleash the burgeoning crowdfunding movement.

In short, the SEC proposed ending a ban on general marketing of such securities as private company stock. The proposal also would apply to private investment funds, including hedge, venture capital and private equity funds. Accredited investors still would be the only people eligible to purchase such interests, but no longer would sellers be restricted in terms of advertising and other forms of marketing.

“For the first time, investors will be able to gain more information about private company offerings beyond their personal networks,” said crowdfunding platform CircleUp, in a statement reacting to the SEC’s proposal. “This is about transparency and choice – allowing market participants to get information about opportunities, both for investors and companies.”

The SEC will accept public comment on the rules proposal for the next 30 days. Below is its entire proposal and rationale:

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