Several readers have written to say that I got it wrong about the Senate crowdfunding bill, that the final legislation is more like Merkley's S.1970 than McHenry's H.R.2930, which became part of the JOBS act. Thank you for the correction! Brad McGee of iCrowd pieced together the actual text of the crowdfunding portion of the JOBS Act-- see below, and many thanks to Brad. I can't digest it now but look forward to doing so soon.
Our Loudsauce campaign for an ad in Politico to nudge the Senate on CF is now live! Please donate, and spread the word: http://goo.gl/ZnHTl. The ad still has a few tweaks pending, and we may give it a more directly challenging lede (Dear Senate: The House and White House Agree... Why Don't You?), but you can see a near-final version below. It was written by Michael Shuman, author of The Small-Mart Revolution and Going Local, and designed by Jake Levitas, who created posters and other graphics for Occupy Wall Street.We want to fund this soon. By all accounts, during this presidential election year, it will be near-impossible to get any new legislation passed if it doesn't happen soon. This article from Portfolio.com (thanks, Kostas Stoilas!) makes the same point. I set the fundraising deadline to March 12, but sooner is better, and Politico needs about 1 week's notice to place an ad. We're figuring if we don't get some significant movement in the Senate by April 1, then there's no way-- no joke.The ad will direct people to a new website LegalizeCrowdfunding.org, which Woodie Neiss and the Startup Exemption folks plan to launch tomorrow. The site will include a form for people to register themselves as entrepreneurs who would benefit from a CF exemption, and then fill in a couple more fields (including their location). This info will be combined into a mouse-over map of the USA, with pop-ups showing all of the supporters, and how many jobs they hope to create through crowdfunding. Nice!
Finally, this post from Carleton's blog discusses whether a CF exemption should (per S.1791) or should not (per H.R.2930) require an intermediary, aka a platform. I think that non web-savvy businesses should be able to crowdfund small investments locally by putting a sign up and connecting personally rather than having to do it online, but I understand the argument both ways and see the benefits of registered intermediaries for control and monitoring. I'd say the ideal solution would be something like requiring an intermediary if investors reside over 100 miles away from the offeror's main business location, but not if they're all local.
This Investment News article from Jan 1 (registration required) reports that the three crowdfunding exemption bills (H.R.2930, S.1791, and S.1970) are stalled in the Senate. On Jan 24th, it's still true.
To remedy this, a bunch of us will be launching a CF campaign soon to raise money to buy a full back-page advertisement in Politico, which is distributed in printed tabloid format in DC, and is reportedly read by congresscritters. According to Politico's rate card (PDF), a black-and-white full-page ad on the back cover will cost $13,680K.
Here's a draft (PDF below), still in need of a designer's touch. Comments welcome, and please watch this space for when the campaign goes live. Of course I hope you will contribute! People in the Senate need to see that there is public interest and support for these proposals before venturing to consider them. That's not just our assumption-- DC sources have told us this.
Meanwhile, Joan MacLeod Heminway and Shelden Ryan Hoffman have published their final version of Proceed at Your Peril: Crowdfunding and the Securities Act of 1933 in the University of Tennessee Law Review. It's comprehensive and current, and new tables in the back list and compare crowdfunding platforms worldwide-- a wonderful contribution.
Two semi-random excerpt from Heminway and Hoffman's paper:
[...] it seems prudent to engage those involved in crowdfunding in the regulatory discussions in a meaningful way before Congress passes legislation that legalizes crowdfunded offerings of securities or the SEC publishes a rule proposal as part of the notice-and-comment process
Our approach encourages a balancing of issuer, investor, and regulatory interests in a manner similar to that involved in federal consumer protection regulation. The overall analogy to consumer protection is too complex to explore in any depth here. Suffice it to say, however, that there are both commonalities and differences in selling securities and other products at similar price points over the Internet.
On the latter point, I wonder if the newly-created Consumer Financial Protection Bureau
will have primary jurisdiction over CF, rather than the SEC.
"(10) makes available on the issuer's website a method of communication that permits the issuer and investors to communicate with one another;"
"(II) provides public communication portals for investors and potential investors;"