Wednesday, October 30, 2013

2013 Entrepreneur Expo - Lecture on Crowdfunding

2013 Entrepreneur Expo

National Black MBA Association, Inc. - Washington DC Chapter

Tuesday, November 5, 2013 from 6:00 PM to 9:00 PM (EST)

Wednesday, October 23, 2013

SEC votes to allow full crowdfunding

The full Securities and Exchange Commission voted today to approve rules allowing full crowdfunding. This means that, in short order, you will be able to sell stock in your small or startup company over the Internet.

Title 3 of the JOBS Act means that issuers can sell securities online to anyone. The SEC voted to create a new SEC Act exemption to do so. The amount of money you can raise and the amount of money you can invest is limited, however. SEC Staff Members John Ramsey and Sebastian Gomez were two of the authors of this exemption. Ramsey noted the new rule requires crowdfunding intermediaries to register with the SEC and FINRA. The new rules create an entirely new type of business financing firm: a Funding Portal (FP). Portals bring investors, companies together. He noted that FINRA will issue a regulatory notice on FPs.

SEC Staff Member Lela Bond noted that the proposed rules exclude foreign companies, investment companies, companies with no business plan, and companies looking to raise money for the purpose of financing a merger or acquisition from using US-based equity crowdfunding. The proposed rules also require intermediaries to provide investor education, collect information about investor income and net worth, and abide by anti money laundering laws. The risk of fraud is to be managed by the intermediary FP. 

While SEC Commissioner Aguilar noted that the new rules could help minorities and women, in later conversations with SEC Officials it became clear that they had no intention of using Title VII of the Act, which requires the SEC to reach out to women and minority owned companies to inform them about these new fundraising opportunities. This may be due to the lack of diversity on the SEC staff. Virtually none of the Senior Staff and actually none of the Commissioners are African American.  

SEC Open MtgSEC Commissioner Gallagher supports proposal and said it would give effect to the will of Congress and the President. He noted that the proposal is carefully written not to add friction and balances investor protection and innovation. Commissioner Stein noted the rule would allow investors to use the wisdom of the crowd to identify and reward good ideas. Commissioner Piwowar noted that the JOBS Act forces SEC to think out of traditional regulatory box and presents a number of challenges. 
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Tuesday, October 22, 2013

Senate pushes SEC on crowdfunding

Letter from the US Senate to the SEC about the JOBS Act.
October 21, 2013
The Honorable Mary Jo White
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Chairman White:
We write in response to recent news reports that the Securities and Exchange Commission (SEC) is nearing the point of proposing regulations on crowdfunding.  Proposed regulations have been delayed significantly, and we urge the SEC to move forward with its proposal as soon as possible.
The Jumpstart Our Business Startups (JOBS) Act was adopted with bipartisan support in both the Senate and the House of Representatives. The legislation was signed into law on April 5, 2012, and in it Congress directed the SEC to publish rules on the crowdfunding provisions within 270 days of enactment.  It has now been over 530 days since the JOBS Act became law, and we have not seen a proposal from the SEC on crowdfunding.  We are concerned that so much time has passed without action. 
The law provides a new financial market for entrepreneurs and startup companies to raise capital, while ensuring investors are protected. We respect and support the SEC’s rulemaking role in structuring this new financial market. Done right and with input from entrepreneurs and investors, the SEC can create a marketplace that is trustworthy and achieves the goals of the crowdfunding provisions of the JOBS Act.  In particular, we have heard from entrepreneurs who have created crowdfunding platforms and those who want to raise capital via this new mechanism, both of whom have been hurt by the delay. 
The new marketplace is designed to provide a mechanism for small and new businesses to access capital crucial to job creation and growing our economy, while providing investors with opportunities to participate thoughtfully in these endeavors.  We urge you to move quickly to propose rules on crowdfunding and thank you in advance for your prompt attention to this matter.
Senator Jeff Merkley (D-OR)
Senators Jerry Moran (R-KS)
Michael Bennet (D-CO)
Mark Warner (D-VA)
Kelly Ayotte (R-NH)
Jon Tester (D-MT)
Pat Toomey (R-PA)
Mary Landrieu (D-LA)

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