SEC Still Has Not Issued Crowdfunding Rules Required by the JOBS Act, While 13 Adventurous States Adopt Their Own Rules
25th November 2014
In 2012, Congress passed the JOBS Act, which purported to open up the capital markets and create jobs by loosening regulations on IPOs and other small business investment opportunities. One of the most controversial and significant components to the JOBS Act was Title III, authorizing equity crowdfunding. The Crowdfund Act enables growing companies to raise money from members of the “crowd” all over the world through equity investments with as minimal red tape as possible. Two years have passed and the SEC’s only action thus far has been to issue proposed rules, which resulted in hundreds of comments, but no action. Thirteen states so far have adopted their own markedly more relaxed rules than the ones proposed by the SEC. These states, including Texas, Michigan, and Indiana, require no audited financials, no extensive disclosure, and no annual filing requirements. In a recent NY Times article, Steven Solomon notes that perhaps the SEC can learn from these few states as to what works and what doesn’t and can apply these lessons to the final rules.