By Carolyn A. Betts, Esq. with Catherine Austin Fitts
The following table compares the crowdfunding provisions enacted in Title 3 of the Jumpstart Our Business Startups Act (“JOBS Act”) (as well as a few expansions in the JOBS Act to Regulation A and Regulation D in Article 21) to currently-available registration exemptions under Regulation A and Regulation D.
Although the SEC and state regulators maintain that flexibility provided by these exemptions are sufficient to permit the raising of equity funds by entrepreneurs, in practice, Regulation A filing requirements are expensive and cumbersome and restrictions on general solicitations under Regulation D make private offerings by issuers extremely cumbersome and in many cases unworkable.
Those who characterize themselves as consumer advocates, as well as many regulators, were heard to object to proposed crowdfunding legislation on the grounds that legalizing crowdfunding will result in a proliferation of boiler-room operations targeting the elderly and unsophisticated members of the public who need the protections afforded by the laws and regulations that are relaxed under the JOBS Act.