Crowdfunding legislation hits turbulence as it nears the finish line

UPDATED: The JOBS Act passed Congress and was signed into law by President Obama. Final bill text here.

I’ve previously posted (here and here) about the crowdfunding measures that have been working their way through Congress. The House has now passed the JOBS Act (text here, for the truly wonky), which contains these measures, and the Senate is debating the bill and some amendments as I write this.

If/when a final bill passes, I will review the final details and what they mean for entrepreneurs.

I certainly agree that it would be great to make it easier for startups to raise limited amounts of capital, and to allow non-“accredited” investors to participate in these investments to a reasonable extent. I am not so sure about the other provisions, which may loosen some appropriate rules put in place in the wake of Enron and Wall Street conflicts of interest. The relaxing of those rules may help a few of the larger “small” companies, but if it comes at the cost of significantly increased fraud, that would not be a good thing for anyone. I’m just not convinced that the regulatory burden is really a significant cause of a reduced level of IPO activity.

I strongly suspect that a broken and abused patent system is a far greater headwind to innovation and drag on the economy than the IPO rules are. But I digress…

Portfolio.com has an update on today’s action, and a good round-up of some of the critics’ views.

By tomorrow, we may have a final bill and then it’s in the President’s hands.


Categorised as: Fundraising