Donnerstag, 14. November 2013

Equity Crowdfunding Regulations Are Not What Congress Intended

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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