New editorial on does U.S. equity crowdfunding legislation need a do-over?

The biggest problem with the non-accredited investor equity crowdfunding component of the JOBS Act is that it is unfair.

Unfair to investors. Unfair to entrepreneurs. Unfair to the funding portals.

To conjecture that it may be difficult for the SEC to implement Title III of the JOBS Act is to be as diffident as an incumbent in a given election cycle's first presidential debate.

Turn back the clockI'm not suggesting that the SEC is incapable of implementing reforms mandated by the JOBS Act.

Though I thought the Commission's rules to implement changes wrought to Regulation D under Dodd-Frank were unnecessarily complex, the rules the SEC proposed to implement the JOBS Act-mandated lifting of the ban on general solicitation in Rule 506 offerings (restricted to accredited purchasers) were simple and on the mark. (Note: this is a view I share with Joe Wallin and Doug Cornelius and some others, but I think it is a minority view; most chide the SEC for not delineating safe harbors for accredited investor verification.)

No, Title III of the JOBS Act will be impossible to implement, not because the SEC isn't up to writing good rules, but because the crowdfunding legislation to be implemented is internally contradictory.

We discuss this frequently on Counselor @ Law.

This week, however, was a watershed. Tuesday I put the html of the McHenry bill into an editor and fixed what the U.S. Senate had broken.

Then, yesterday morning, I wrote a post laying out why I think Rep. McHenry should attempt a do-over at equity crowdfunding for nonaccredited investors.

Because everything on the topic seemed to gel and the prose of the morning post felt pretty darn good, I asked Eric Mack of if he would be interested in running it as an editorial. He said yes, and I'm grateful.

We can continue the discussion here too, of course. But I hope you go to the editorial at and considerate it in conjunction with the proposed McHenry do-over bill.

Image: Sophia D / Flickr.

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