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More on Crowdfunding and the SEC

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After celebrating the first anniversary of the passage of the JOBS Act, the SEC still has not adopted regulations to implement the law as required. (Background post).

Congress is taking notice, as the House Small Business Subcommittee on Investigations, Oversight and Regulations last week held hearings on the SEC's delay.

In testimony before the Subcommittee, SEC staffers explained the work that had been done so far to implement the JOBS Act but were curiously silent as to the reason why the SEC had missed the deadline for the adoption of rules to implement the crowdfunding provisions of the law.

In his opening statement, Chairman David Schweikert (R - Az.) noted that these regulations were "long past due." He said that "the longer we wait for action by the regulators, the more our engines of economic growth will continue to simply tread water, or worse yet starve, for lack of opportunity."

At least one witness at the hearing put the blame for the delay squarely at the feet of the SEC. Georgetown University finance Prof. James J. Angel testified that "The commission has shown a pattern of antipathy toward the idea of crowdfunding from the beginning and is in great danger of killing the idea through regulatory delay and over- regulation."

In addition, on Wednesday, April 17th the House Committee on Financial Services will be holding a hearing provocatively entitled, "Examining the SEC's Failure to Implement Title II of the JOBS Act and its Impact on Economic Growth."

In the mean time, Forbes blogger David Drake in a recent post forecast the possibility that Italy will overtake the U.S. in equity-based crowdfunding. (Apparently regulators in Italy have made more progress than their counterparts in the U.S. when it comes to implementing crowdfunding).

It goes to show how far the concerns of U.S. lawmakers and regulators have shifted when securities laws in Italy are more friendly to business than those in the U.S.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


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