Over two years ago on April 5, 2012, President Obama signed the JOBS Act into law. The goal was to support startups and small businesses by helping them get access to capital in new ways. While some parts of the JOBS Act are now in place, the Title III section permitting equity crowdfunding for non-accredited investors is still under review by the Securities & Exchange Commission (SEC). Title III would permit average U.S. citizens to buy ownership in startup companies through crowdfunding.
I commend the SEC’s intention of trying to safeguard the investing public to the extent possible. I acknowledge that some monetary losses will occur and that some unscrupulous people will attempt to defraud the public. However, despite these concerns it is past time for the SEC to finalize the Title III rules and release them so that average U.S. citizens can participate in equity crowdfunding…as the wealthy are already allowed to do.
Some might argue that startup firms are risky and that average citizens should not be allowed to take the risk of investing in them. I completely disagree. It’s irrational to allow people to enjoy mountain climbing, scuba diving, and skydiving while forbidding them to invest $1,000 in a risky startup company. I believe in personal freedom and allowing neighbors to invest in neighbors just makes sense.
I recognize that the SEC is coping with complex issues and that some appropriate balance needs to be found that provides reasonable safeguards while granting citizens the freedom to choose their investment. It is also clear that there are thorny details to figure out so that implementation of the rules will establish a viable marketplace. For example, the SEC has to figure out a way to let investors invest through a special purpose LLC and to simplify any long term reporting requirements on the issuers. That said, it’s been two years already and it’s time to move forward.
The Empire State Building was the tallest building in the world for about 40 years and it was built in less than two years. The Normandy Invasion of World War Two involved over 5,000 ships; over 10,000 aircraft; and over 1,000,000 men. It took under two years to plan and execute the Normandy Invasion. The world’s largest cruise ship, Oasis of the Seas carries over 7,500 passengers and crew and was built in less than two years. All of these incredibly complex projects were successfully completed in less time that the SEC has already spent working on the JOBS Act Title III regulations.
The JOBS Act was intended to support the growth of more businesses to create more jobs and strengthen our economy. America has a grand tradition of creating new inventions and launching small businesses that spring from garages all across our nation. Title III of the JOBS Act is the fuel many of these business visionaries need to move forward. The SEC needs to finish its work so that the rest of us can start ours.