Crowdfunding Legislation Both Panned and Praised

From Investor’s Business Daily and Yahoo! Finance:

Business observers say there is growing and widespread enthusiasm in the U.S. to provide greater support for entrepreneurs. Crowdfunding fits into that trend.

“It’s crucial that crowdfunding move beyond donation model and emerge into an equity model,” said John Berlau, who follows the finance and capital markets for Competitive Enterprise Institute, a free market-oriented think tank.

But Berlau is disappointed in the Senate amendment to the JOBS Act as it pertains to crowdfunding.

The amendment, authored by Sens. Scott Brown, R.-Mass., and Jeff Merkley, D.-Ore., puts tight restrictions on who can fund startups and by how much, among other things, Berlau says. He says a House version is better but the Senate version likely will prevail.

“The Senate bill requires mounds of voluminous filings with the SEC,” Berlau said. “It also imposes liability for technical mistakes, perhaps even more so than even for a normal public company.

“It’s a trial lawyers’ bonanza.”