Crowd funding expert David Drake has termed it “marvelous” that key figures including heads of the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) and Congressman Patrick McHenry (R-NC) (a member of the House Financial Services Committee) are in support of the crowdfunding component of the JOBS Act (Jumpstart Our Business Startups Act).
CFIRA’s Development of Crowdfunding Regulations Symposium, held on Friday July 13, 2012 in Washington, DC, brought together lawmakers, regulators and crowdfunding advocates to discuss the regulatory framework for crowdfunding. As a founding executive committee member of CFIRA, The Soho Loft was very proud that CFIRA, our industry organization, pulled off such a large event to facilitate dialogue between the three groups.
The presence of Executive VP of Regulatory Policy at FINRA, Tom Selman, and the Chief Counsel of the SEC’s Division of Trading and Markets, David Blass, at this symposium clearly signaled that hard work is occurring to make this law functional. In addition to representatives from government agencies and Congressman McHenry, the Legislative Counsel to U.S. Senator Jeff Merkley (D-Oregon) also attended to represent the Senator.
Douglas S. Ellenoff of Ellenoff Grossman & Schole LLP, who had joined all CFIRA SEC meetings to date commented, “Folks interested in crowdfunding should be very encouraged by the continued commitment that each of the legislative representatives has towards the effective and prompt implementation of the crowdfunding provisions of the JOBS Act, as well as the thorough yet practical approach the SEC (both the divisions of Trading and Markets and Corporate Finance) has emphasized to ensure that this new industry may be viable.”
“While timing continues to be of significant interest to observers of the lawmaking process, the crowdfunding industry has been given numerous opportunities to meet with the SEC and share their interpretations of the crowdfunding provisions of the JOBS Act. Both the industry and regulators are appropriately seeking to balance legitimate concerns about investor protection with the necessity of facilitating capital formation online for entrepreneurs. Both aims are consistent with the legislative intent.”
Once again, the issue of whether the law would be more practical if it imposed a $5 million ceiling rather than the $1 million ceiling now implemented was fervently discussed at length during the July 13 event.
Overall, there is still a long way to go in terms of finalizing the legal framework for crowdfunding and crowdfunding advocates are looking forward to the SEC hearing of August 22 on the removal of the solicitation ban under Regulation D, exemption 506. This is a law that precedes the functionality of crowdfunding for equity (which is also known as crowd fund investing) currently being legalized in the US through the JOBS Act.
David Drake stressed, “We must work closely with both FINRA, SEC, CFIRA and congressional offices to make sure success comes from our efforts. I could not be prouder to see all the members of CFIRA work hard to organize this successful day and to see the continuous conversations involving the key groups involved in the construction of this legislative framework.”
Crowd fund investments for equity is now a lot closer at hand here in the US.
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