Where are the JOBS Act’s Crowd Funding Rules?
According to Chance Barnett, the co-founder of Crowdfunder, the Securities and Exchange Commission (SEC) is supposed to finalizing rules regarding a specific provision of the Jumpstart Our Business Startups Act (JOBS Act). The provision, which should be in place by June, removes the ban on publicly seeking investors.
In a panel discussion on Thursday, Barnett also said that the rules for the third part of the JOBS act, “which would make it possible to raise money on an online portal from non-accredited investors” most likely will not be ready until the third or fourth quarter of this year.
The JOBS Act was signed into law a year ago and passed with bipartisan support. It is a compilation of six pieces of legislation that are aimed at making it easier for small businesses to get capital and create jobs.
In order for some of the most popular provisions of the JOBS Act to be enacted, it is necessary to for the SEC to write rules that will protect protect the investors while encouraging investment. Writing the rules is a very complex task, which is at least part of the reason progress has been so slow.
Many of the industry leaders and the crowd funding platforms have been frustrated because the commission has missed a number of deadlines when writing these regulations. Crowd funding platforms that have been trying to catch up with fundraising because of the JOBS Act have had problems as a result of the delays, and some of them have had to shut down.
Other crowd funding platforms that already had investors have done fine for themselves. Although it may be a while before the regulations are enacted, they should benefit investors and small businesses alike.