Conclusion up front: I wish there were a third option on the table, but given the options I have, I support H.R.3606.
More thoughtful detail: Today was a very tough day for me and for Launcht. Today I saw just how wide the gray area is, though I deeply wanted to see this issue in black and white. The best version of crowdfunding and affiliated regulatory reforms was pretty much killed today. The remaining workable version of crowdfunding is packaged in a bill filled with many troubling provisions. I wrestled all day with whether I should endorse a bill that contains something I fought for, even if the whole package is dicey at best and dangerous at worst.
For context, the legalization of equity crowdfunding is the most public and sexy component of a very significant package of banking and securities legislation from the House in the form of H.R.3606, the Jumpstart our Business Startups Act or J.O.B.S. Act. This bill would certainly create jobs as soon as it is put in effect in a little under a year. It aims to do so by making it easier for startups and small businesses to access needed capital. The bill is overbroad though and quite possibly prone to fraud. To take a single reference from the bill, “small businesses” are those making less than $1 Billion in revenue per year. That alone drives me nuts, not to mention other components of the bill that feel equally out of proportion.
The best chance to include a principled amendment to the bill that kept most of the act’s original intent was voted down today, falling 5 votes shy of a needed 60 votes in the Senate. That hurt me, Launcht, crowdfunding, and possibly America. Now I am left with the fact that I deeply believe in the potential offered by equity crowdfunding and have been in the halls of the Senate advocating for it since early November. The JOBS Act still contains a crowdfunding provision, albeit flawed. Though in a surprise procedural move from Senator Reid (D-NV) it was not put to cloture vote today (cloture in this case being a proxy for a vote on the bill itself). It is still in the Senate and may see a vote tomorrow, barring further procedural moves on the matter.
I want to see equity crowdfunding flourish and will work within our industry and with the SEC during rule-making to improve the version of crowdfunding proposed in HR3606, should it get passed. For right now, I am left torn on the issue and seriously hoping that a 3rd option surprisingly presents itself in the form of fuller debate and a different amendments process on HR3606.
Until that presents itself, I look forward to the passage of the J.O.B.S Act and to making it right on the other side.