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Troops Rallying For Smarter Rules Around Equity Crowdfunding

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Troops Rallying For Smarter Rules Around Equity Crowdfunding

 One such letter was submitted by the Competitive Enterprise Institute’s John Berlau, and the letter was summarized in a recent release.

"Every day on the Internet, not just products, but businesses, are bought and sold. On eBay, for instance, it is possible to buy retail stores. In 2012, a gas station and convenience store in North Carolina exchanged hands on eBay for about $1.2 million. Yet as large as it was, this transaction was governed by a fraction of the rules for a $500 investment in a publicly–traded company.

And this illustrates a fundamental contradiction of our securities laws and policies impeding capital formation that the JOBS Act sought to address. Buying an entire business requires much more due diligence on the part of the purchaser than investing in a portion of a business. Yet investors buying the smallest portions of the smallest businesses face more “protections” than if they pay thousands more for a business outright. This paradox harms the well being of both small investors and small entrepreneurs."

The SEC is listening, but will they be swayed? Time will tell.