Equity crowd funding
supporters and the sites themselves are busy sending comments to the SEC,
hoping to convince the agency to rework the regulations before they are
finalized.They say the rules as they stand are not what Congress intended.
"The
compliance burden needs to be scaled down for the role funding portals are
playing," said Sherwood Neiss, a principal in Crowdfund Capital Advisors,
which advises investors, companies and others on how to take advantage of crowd
funding."They are not allowed to curate [deals] or play a hands-on role,
but they're liable if the [company issuing the shares] says anything wrong. We
have to get the SEC to understand that that's not fair."
Entrepreneurs
say the disclosure requirements as they stand will discourage startups that are
operating on a shoe string from crowd funding equity.
"What
we're seeing is accounting standards, annual reporting, financial audits,"
he said. "They're putting a very traditional paradigm of reporting on
small companies that don't have anything to speak of. If the cost of raising
capital hits a certain threshold, it's not worth doing anymore."
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