Entrepreneurs Are Popping Up Websites In Anticipation Of Crowdfunding Rules; SEC Is Already Looking For Possible Risks To Investors

Friday, January 18, 2013 07:46
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Entrepreneurs Are Popping Up Websites In Anticipation Of Crowdfunding Rules; SEC Is Already Looking For Possible Risks To Investors

Tags: investing | regulation | sec

Entrepreneurs are wasting no time popping up websites in anticipation of the new crowdfunding rules; neither is the SEC.
 
Over 200 websites are being scrutinized by regulators for possible risks to investors.

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The Jumpstart Our Business Startups (JOBS) Act loosens the constraints on small companies so they can sell shares on the internet.
 
Current securities laws prohibit private companies from advertising or selling shares to unaccredited investors.
 
President Obama hailed the Act as he signed it last April, calling it a game changer that would open opportunities for ordinary Americans to invest in companies they believe in.
 
The new law also promises to be a much-needed boost for small companies starving for capital.
 
But regulators are concerned that the relaxed new rules also may invite fraud.
 
The January 1 deadline came and went for the SEC to write new rules specifically for crowdfunding.
 
Regulators surfed the ‘net at the end of the year and found over 9001 sites that contained the word crowdfunding.
 
State regulators are already taking action on some companies who are jumping the gun and allegedly exploiting online fundraising to defraud investors.
 
Supporters of the new law say that state regulators are blowing the dangers out of proportion.
 
They say the real danger is that national regulators will choke off the industry before it gets going and that the new rules will be so burdensome they will not be operable.

 

 

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