Final Crowdfunding Rules Not Likely Until Late 2014
When the JOBS act passed in 2012, I was very excited that the US government had come up with an excellent solution to a growing problem. Over the past ten to fifteen years, there has been a growing gap between the funding for new startups available from angel investors and funding from institutional venture capitalists. I will write a post some other day regarding why that gap exists.
I thought that crowdfunding from accredited investors – essentially creating a large syndicate of angels – could fill that gap. A friend and I even worked to plan a new form of investment bank to do just that, even going so far as to arrange the purchase of an entity with a broker/dealer license and initial pitches to potential investors in the deals that we would find. But we decided to put the brakes on when the SEC was so slow to release final rules – we didn’t want to press forward only to discover that we had inadvertently violated a rule that had not yet been promulgated.
Now, we find that the final rules are likely to be further delayed into late 2014 because of the need to have FINRA – the financial industry’s self-regulation organization – involved.
I understand the need to have strong regulation in the securities industry. History shows us that too many people succumb to the temptation to fleece people of their money without strong regulations. But no final rules until 2 1/2 years after congress acts is crazy. Congress should not allow the SEC staff to drag its heals like this.
See an excellent article on this latest delay in the Crowdfunding times: [Link]