Senate pushes SEC on crowdfunding

Letter from the US Senate to the SEC about the JOBS Act.

October 21, 2013

Chairman

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.

Sincerely,

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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As the article notes, "For a people who revere startup culture and the idea that one can bootstrap one’s way to business success, we seem to prefer the TV version to the real thing — especially as of late. It turns out that new business creation recently approached its 40-year low. Banks are retaining their Great Recession-era tight-fistedness and the costs of education, housing and healthcare continue daily to expand beyond the ability of most Americans to keep pace... Due to these factors — along with the legalization of equity crowdfunding accomplished via the passage of the JOBS Act in 2012 — crowdfunding has arisen as a means of raising startup funds. You may only be familiar with crowdfunding in the context of all the medical- and disaster-based campaigns that have been making the news lately, but crowdfunding is a viable way to raise money for businesses as well." See the full article at: https://www.merchantmaverick.com/crowdfunding-for-startups-8-tips-you-s...

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