Crowd Funding Rules Not Creative Enough ?

The NYTimes finds the SEC’s proposed crowdfunding regs to be weak and unimaginative.

Noting that most professional VC investments payoff only 20% of the time and that the rules don’t prevent fraud (what rules do?), the article bemoans the lack of a diversification requirement, the inability to exit the investment and an overwrought attempt to economically justify sticking closely to the statute (the Crowd Fund Act, Title III of the JOBS Act).

However, the author doesn’t acknowledge that the market is already dealing with these issues.

Angel List is permitting “class” investing that provides an automatic diversified portfolio of incubator companies. There are several secondary market firms that are trading restricted, privately placed securities prior to the one year hold requirement by selling to accredited investors. And, SEC staffers aren’t there to be imaginative, that’s the job of the private sector. The SEC exists to enforce Congressionally mandated statutes, whether or not they now appear to be a good idea.

You decide now and time will tell in the long run.

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at:
This entry was posted in Broker dealers, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, FINRA, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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