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Yay! New Laws for Crowdfunding!

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Renegade:
The SEC is apparently creating laws to do away with bad laws so that people can start businesses.

http://finance.yahoo.com/news/u-sec-release-long-awaited-105956761.html

Entrepreneurs and start-up companies looking for backing will be able to solicit small investments over the Internet from the general public under a new proposal to be released by U.S. regulators on Wednesday.

The Securities and Exchange Commission's "crowdfunding" plan is a requirement in the Jumpstart Our Business Startups (JOBS) Act, a 2012 law enacted with wide bipartisan support that relaxes federal regulations to help spur small business growth.

Equity crowdfunding lets small companies raise money by pooling together tiny investments from people around the country in exchange for a potential financial return.

If adopted by the five-member SEC, the rule would be a major shift in how small U.S. companies can raise money in the private securities market.

Private companies are now only allowed to solicit investors deemed to be "accredited," meaning they have a net worth of $1 million, excluding the value of their home, or an individual annual income over $200,000. The crowdfunding rule would let small businesses raise over $1 million a year by tapping unaccredited investors.

Companies could sell stakes to mom-and-pop investors without registering the securities with the SEC, a move designed to make it cheaper and less cumbersome for struggling startups trying to get their businesses off the ground. They would still be required to raise the money through regulated broker-dealers such as CircleUp or through crowdfunding portals.
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Good news for Kickstarter and Indiegogo? They seemed to be doing fine and regular people seemed to be able to use them.

I'm just confuzzled. More bewilderment at the link.

40hz:
The problem is when businesses like Canonical start soliciting $32M via Indiegogo that the SEC starts getting concerned. And rightly so IMHO. Especially now that there are so many clueless people flocking to crowdfunding sites.

Many would-be investors have noted how it's relatively easy for a fraudulent person to pre-seed a kickstarter with large personal pledges (in order to create the appearance of project momentum) only to pull them later on. This trick has been seen more than a few times on both Kickstarter and Indiegogo.

So if anything was ever ripe for scamming, it's crowdfunding. And to add to the fun, we're already starting to see major corporations now looking at crowdfunding solicitations as a way to circumvent regulations designed to prevent investor abuse.

Then there's those game devs that have a successful Kickstarter campaign only to mysteriously become hard to find afterwards. (See here and here.)

Not all regulation is automatically bad. 8)

wraith808:
Well, considering the fact that the returns on 'investments' on kickstarter/indiegogo are products and not hard curry, I'm not sure that the applicability is there.  And looking at the proposed legislature, I hope it's not.  Because they change the barrier to entry drastically, where this barrier was the reason that crowdfunding became popular in the first place.

While it is true that there are scams, we can't say that anything the feds try to regulate aren't scams also.  So this seems to try to solve a problem that they should perhaps solve on the larger scale first and leave the couple of negative examples as just that?  A couple of negative examples?

Renegade:
Not all regulation is automatically bad. 8)
-40hz (October 23, 2013, 11:29 AM)
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Please name some regulation that isn't bad. But before you tell me what it is, ask yourself if there isn't already some law to deal with the situation already in place. It's harder than it sounds.

Nothing in that law is remotely needed. There are already laws against fraud.

If the point is to prevent scams/fraud, well, how about start by enforcing existing laws against criminal organizations that are guilty of fraud?

However, I'm thinking about this all logically. Programming has that affect on you. e.g. If there's a method to handle A, then use it and don't create another method.

We don't need lawyers and politicians creating more laws. We need programmers, coders, system architects, information architects, etc., working to destroy as many laws as possible. What we want is something neat, clean, and easy to use.


What do you think the law would look like if it were an API/SDK?

Stoic Joker:
Nothing in that law is remotely needed. There are already laws against fraud.-Renegade (October 23, 2013, 10:26 PM)
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+1 - I still say the 10 commandments were enough if the spirit of the laws were followed instead of constantly mincing words to carve out loopholes.


What do you think the law would look like if it were an API/SDK?-Renegade (October 23, 2013, 10:26 PM)
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ROFL ...That could only happen in a mythical land where computers could count to at least 3.


--- Code: C++ ---BOOL bGuilty = 2 // Close enough because (house needs a win) defendant can't fight our need for a conviction.

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