We are writing to follow up on the successful passage of the amended JOBS Act in the Senate last week. Here is our recap of the steps Launcht took to push for the passage of an equity crowdfunding law and the steps the legislation took in the Senate.
On July 7th, 2011 we started drawing attention to changes in securities laws that would have to take place for equity crowdfunding to come into its own. On September 27th, 2011 we started reaching out to bring other players in the crowdfunding industry together to build support for HR2930. Through our outreach, we learned that this organizing was already underway and was being coordinated by Startup Exemption.
In early October, 2011 the guys at Startup Exemption began spreading the word about their success advocating for crowdfunding in the US House of Representatives that fall. Their framework for proposed legislation had been picked up by Congressman Patrick McHenry (R-NC) and used as the template for H.R.2930, which went on to pass the House 407-17 on November 3rd, 2011.
On November 17th, Launcht CEO, Freeman White, went to Washington DC for a rally to make equity crowdfunding legal. Later that day, he had initial meetings with the key staff of Senators from Pennsylvania, Massachusetts, Vermont, and New Jersey to build awareness amongst Senate staff about this important issue. Freeman returned to Washington DC 7 times between November 17th, 2011 and March 22nd, 2012 to talk with the drivers of crowdfunding legislation in the Senate and advocate for the legislation.
At one point in that process there were 5 different bills related to equity crowdfunding under consideration by the Senate, H.R.2930, S.1791, S.1970, S.2190, and H.R.3606. Towards the end, only two of these had a viable political future. S.2190 was in play because it had bipartisan sponsorship and combined S.1791 and S.1970 along with provisions for increased regulatory oversight. H.R.3606, the JOBS Act, was ascendent because it packaged several capital formation and finance industry reform bills the House had already passed and reiterated them to the Senate in one bill. The crowdfunding portion of H.R.3606 was the same as H.R.2930 when it was first passed in the House and needed to be amended to address valid concerns raised during the Senate debates.
The pace of debate and action on equity crowdfunding in the Senate escalated quickly following the passage of the JOBS Act in the House on March 8th, 2012. As we wrote earlier, S.2190 was introduced as an amendment to the JOBS Act in mid March. Launcht came out strongly in favor of this version of crowdfunding because it provided the best investor protections, the most accountability for companies raising funds, a requirement to use independent crowdfunding platforms, and clear reporting relationships with regulators. To show our support, we wrote an endorsement of the bill and sent it to Senate leaders on March 14th.
By March 22nd, our endorsement of the legislation had been read aloud and/or quoted on the Senate floor by three different Senators, including Senator Mary Landrieu (D-LA) the chair of the Senate Committee on Small Business and Entrepreneurship. Our position on the matter was respected by these Senators and others as a voice for getting crowdfunding right. Many readers of this blog and advocates for equity crowdfunding championed the cause of getting this amendment introduced and passed in the Senate. On March 22nd, just before the JOBS Act was voted on, the amendment passed 64-35 with clear bipartisan support, essentially adding the language from S.2190 to the JOBS Act. The JOBS Act passed 73-26 within minutes thereafter.
Following the amendment and passage in the Senate, the JOBS Act was sent back to the House for approval of the amendment. The House intends to vote on the matter early this week. Launcht has already contacted our local Congressman in the House and we expect to see this amendment and the full JOBS Act to pass as-is very soon. President Barack Obama already signaled in early March that he will sign the JOBS Act into law as soon as he gets it. After that point, the Securities and Exchange Commission will have 271 days to interpret the legislation during its rule-making period. As ever, Launcht will be your advocate during this phase of the process as well.
For their special efforts in collaborating with us to get an equity crowdfunding bill passed in the Senate, we would like to thank: Andy Green and the staff of Senator Jeff Merkley’s Office, Brian Murphy and the staff of Senator Scott Brown’s office, Senator Michael Bennet, Senator Mary Landrieu, Laura Tomasko and the Tomasko Family, Woodie Neiss and Jason Best of Startup Exemption, and the staff of Senator Pat Toomey’s office. In addition to the many others who made this victory possible, Launcht is especially appreciative of your support. Thank you.
We look forward to your comments below and stay tuned here for more updates on equity crowdfunding.