Advocates push SEC to propose crowd funding rules

DC Conference

Crowd funding and venture capital representatives and small-business advocates on Tuesday urged Securities and Exchange Commission Chairman Elisse Walter to propose rules for crowd funding. bloomberg photo

About a dozen crowd funding and venture capital representatives and small-business advocates on Tuesday urged Securities and Exchange Commission Chairman Elisse Walter to propose rules for crowd funding.

A type of financing that lets small investors buy equity or debt in startups over the Internet, crowd funding is among several provisions of the Jumpstart Our Business Startups Act — signed by President Barack Obama last April — designed to ease securities registration rules for entrepreneurs.

The SEC has not yet proposed a crowd funding rule, which was due in January. It is one of several JOBS Act rules that have fallen behind schedule.

“Chairman Walter has the ability to call forward these rules for public comment,” Candace Klein, founder and chief executive of SomoLend, said at a National Press Club press conference. “As an industry, we are being as proactive as we can to answer the SEC’s concerns about investor protection.”

Supporters of the act, which was approved by large bipartisan majorities, say it would help spur economic growth and create jobs by providing capital to small businesses. Skeptics, including state regulators, warn that diluting registration requirements could harm investors. They want the SEC to add more protections.

But SEC leadership is in transition. The president has nominated Mary Jo White, a former U.S. attorney and Wall Street defense lawyer, to be SEC chairman. Ms. Walter will serve in that role until Ms. White is confirmed by the Senate. It’s not clear whether the agency will promulgate a crowd funding rule before Ms. White arrives.

“We’ve been working very hard on this complex rulemaking effort and very much appreciate the extensive input we’ve received from potential crowd funding participants and others,” SEC spokesman John Nester wrote in an email. “We will continue working hard amid a busy rulemaking agenda to get these crowd funding rules done as soon as possible, with an emphasis on getting them right.”

Crowd funding advocates were scheduled to meet with White House and SEC staff and conduct a Capitol Hill briefing on Tuesday.

They argue that crowd funding is a safe way for small businesses — ranging for technology startups to coffee shops — to raise capital. They note that the JOBS Act contained several investor protections, including caps on the amount of securities that can be purchased. In addition, funding portals have built-in investor education and disclosure features.

The North American Securities Administrators Association is not convinced.

“Our concerns about the fraud potential facing investors and entrepreneurs related to crowd funding are unchanged,” Heath Abshure, NASAA president and Arkansas securities commissioner, said in a statement. “For crowd funding to have the best opportunity to realize the potential its proponents promised, the SEC must take the time necessary to ensure a reasonable balance between investor protection and the needs of industry.”

The crowd funding market could total $3.98 billion in five years, according to Sherwood Neiss, a principal at Crowdfund Capital Advisors. He based his projection on a recent study by the University of California-Berkeley.

“We have the ability to flip the switch and solve an endemic problem that faces entrepreneurs across the country,” Mr. Neiss said, referring to a lack of capital for small businesses.

Source: Investment News – Mark Schoeff Jr.

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise FeesNPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it wou [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

Bitcoin News (press release)Crowdfunding Giant Indiegogo Joins the ICO BandwagonBitcoin News (press release)Crowdfunding Giant Indiegogo Joins the ICO Bandwagon Indiegogo is a popular crowdfunding platform headquartered in San Francisco that was founded in 2008 by Eric Schell, Slava R [...]

HuffPostIs Crowdfunding Really a Good Idea for Innovation?HuffPostHere's a head-scratcher for you: according to new research, if you refer to your product or idea as both “novel” and “useful” in your crowdfunding campaign, your funding will be lower than it would if you just decl [...]

Coindesk (press release) (blog)Crowdfunding Giant Indiegogo Opens to ICOs - CoinDeskCoindesk (press release) (blog)The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services to projects seek to use the blockchain funding model. [...]

FortuneWant to Hold Your Own ICO? Indiegogo Can Help You With ThatFortuneCrowdfunding sites like Kickstarter (kickstarter, +0.00%) and Indiegogo raised start-up cash for a generation of online entrepreneurs, but one increasingly visible method of internet-sourced financing seemed to h [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |