Wednesday, October 23, 2013

SEC Moves Ahead With 'Crowdfunding' Proposal - WSJ.com

SEC Moves Ahead With 'Crowdfunding' Proposal - WSJ.com:

The Securities and Exchange Commission voted 5-0 to propose rules aimed at helping startups sell shares through online "portals," where supporters say thousands of investors could pore over the business plans of small companies and choose promising investments. The proposal would implement a key provision from last year's Jumpstart Our Business Startups Act, a law meant to spur business activity. Wednesday's proposal doesn't require companies to verify that individuals meet income thresholds set by the law, officials said. Instead, the SEC asks for comment on whether verification steps are needed. Crowdfunding advocates have complained verification would be costly and difficult. Under the JOBS Act, companies are allowed to raise up to $5,000 annually from individuals with incomes less than $100,000. Wealthier investors could contribute a maximum of $100,000 annually
Risky, and inequal.
"You've got leftovers being sold to people who are chasing this pot of gold at the end of the rainbow," said former SEC chief accountant Lynn Turner. "You'd have to be an idiot to think anything other than the pot of gold is going to turn into a bag of coal.
Websites like Circleup and Kickstarter are happy, but it is still early to tell what it means to ordinary investors who are not "accredited".

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