SmartMoney Blogs

Real-Time Advice
Our real-time advice on how market shifts and news impact you and your money

Will SEC Fines Stall Crowdfunding?

The SEC’s crackdown on alleged abuses in pre-IPO investing could be a setback for “crowdfunding” legislation designed to make it easier for entrepreneurs to raise money from retail investors, observers say.

A bill called the JOBS Act that’s currently under consideration in the Senate would relax the rules around private-company investing, allowing small private businesses to raise up to $1 million from retail investors online. But the SEC recently fined a website that lets wealthy investors buy private-company stock for not registering as a broker-dealer, and charged two money managers who sold private-company stock with misleading or overcharging investors, the Wall Street Journal reports. “This SEC action is a perfect illustration of how dangerous and misguided the JOBS Act is,” says Barbara Roper, the director of investor protection at the Consumer Federation. “If it passes it will result in increased fraud, and that will hurt both investors and the small companies it is supposed to benefit,” Roper says.

Currently, only wealthy investors can buy stock in companies that aren’t publicly traded, such as Twitter or Facebook. Investors generally must be “accredited,” meaning they have a net worth of at least $1 million (not including the value of their home) or an income of at least $200,000 a year. “The rules are designed to make sure that people have a certain amount of financial ability to tolerate the risk of these investments,” says Charles Rotblut, the vice president of the American Association of Individual Investors. Without a liquid, public market for a stock, and without the financial disclosures public companies have to make, it’s much harder to determine how much a share is worth, Rotblut says. “When you’re buying shares on a private market, you’re basically paying what sellers are asking for. It’s equivalent to going on StubHub and buying tickets for a sold-out concert,” he says.

It makes sense to tweak these rules a bit, but the “crowdfunding” bill removes too many protections for retail investors, says Robert Pozen, a senior lecturer at Harvard Business School and a senior fellow at the Brookings Institution. “Of course we want to encourage capital-raising, but we need to do it in a way that’s reasonable from an investor’s point of view,” Pozen says.

Small businesses should have to make some financial disclosures to raise money online, and websites selling these shares should have to register with the SEC in some way, he says. It may also make sense to set a fairly low limit on how much individuals can risk, say $1,000, to ensure that retail investors don’t lose significant amounts in risky ventures, Pozen says. “The reality is that unfortunately for every Facebook there are hundreds that don’t work out, and we need to make sure that people who are investing in this understand the risk involved and can bear losses without doing some terrible things to their families,” he says.


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 11)

View all Comments »
    • Hi there just wanted to give you a quick heads up and let you know a few of the pictures aren’t loading correctly. I’m not sure why but I think its a linking issue. I’ve tried it in two different internet browsers and both show the same results.

    • naturally like your web-site however you need to check the spelling on several of your posts. A number of them are rife with spelling problems and I find it very bothersome to tell the reality nevertheless I’ll definitely come back again.

    • I used to be recommended this web site through my cousin. I’m now not positive whether or not this publish is written by him as no one else recognise such designated approximately my trouble. You are wonderful! Thanks!

    • By WebOsPublisher

      O Designlov fornece referГЄncias Гєteis e inovadoras para designers e artistas digitais de todo mundo.
      Designlov » Facebook Icons
      Sobre o Designlov
      Design de Interiores
      GrГЎfico $ Editorial
      Web $ Interface

      Follow @designlov

      Outras imagens e posts para sua inspiração
      Decolagens em SГЈo Francisco
      Fatos divertidos sobre o Instagr.am
      Que tipo de filme vocГЄ quer fazer?
      Mafia Animals, por Nick Rudnicki
      The Social Network Illustrations
      PГґsteres em Amsterdam, Holanda
      Metamorfose Humana
      Pinturas tipogrГЎficas
      O design grГЎfico pode mudar a sua vida
      Design de tГЄnis para Nike Daniel Reese
      Posers da internet
      FC Barcelona Vintage
      Game of Thrones Posters
      Design Chapel
      Capas de discos famosos com gatinhos
      Sellected Studio – Website
      Itens de filmes, sГ©rie de pГґsteres
      Aaron Nace
      Sexo nГЈo Г© acidental – MTV
      O estilo da mГєsica
      Raging Mob!, ilustração digital por Michał Dziekan
      Land of the free, tipografia de Chris LaBrooy
      Fotografias animadas, por Jamie Beck

      Facebook Icons
      28 de abril de 2011
      Via:В Leonard Savage.com
      Tags:facebook, icons –Facebook Icons

      JoГЈo Paulo Teixeira
      Creative Art Director at Hugeinc.com
      Coleção completa de João Paulo Teixeira
      Deixe seu comentГЎrio
      Fotos de Berlim no inverno

      © Todos os trabalhos apresentados aqui têm seus direitos reservados. O Designlov não se responsabiliza pelo conteúdo dos links mostrados, apenas divulga como inspiração e referência visual.


    • By WebOsPublisher

      Forum discussion: I sometimes prefer different icons than the defaults from out of the box. I finally came across a listing of where microsoft has hidden the other choices. I’m not sure if the listing applies to all win 9X or not,but they seem to be present in win 2
      Windows Icon files – Microsoft Help | DSLReports Forums
      @import url(i.dslr.net/css/aj6/ie7.css);
      republican-creolesite Search:
      login · register
      Find Service
      ISP News
      All Forums
      Hot Topics
      how-to block ads
      Forums OS and Software Microsoft Help Windows Icon files
      Search Topic:
      Share Topic
      Post a:
      Post a:
      Links: ·MS Apps FAQ ·Windows XP FAQ ·Windows 7 FAQ ·Windows Home ·Office Home
      AuthorAll Replies stev32kPremiumjoin:2000-04-27Mobile, ALkudos:1Reviews:·DIRECTV·AT&T Southeast·MediacomWindows Icon files I sometimes prefer different icons than the defaults from out of the box. I finally came across a listing of where microsoft has hidden the other choices. I’m not sure if the listing applies to all win 9X or not, but they seem to be present in win 2k.WEBCHECK.DLL - Desktop Icon, Radar Icon, Internet Explorer IconsRNAUI.DLL - Dial-Up IconsSHDOC401.DLL - Misc. Internet Explorer IconsSENDMAIL.DLL - Envelope IconDATACLEN.DLL - Harddrive with a dustbusterSHELL32.DLL - Standard Windows IconsCOOL.DLL - High resolution icons of SHELL32.DLLMYDOCS.DLL - The infamous “My Documents” iconMSTASK.DLL - Task Manager iconsSHDOCVW.DLL - Misc. home page icons and a network driveBROWSEUI.DLL - A tiny folder icon with a starCRYPTUI.DLL - Certificate icons and secure style iconsSHSCRAP.DLL - A torn note paperURL.DLL - Misc. Internet Explorer icons and a newspaper icon.MSIEFTP.DLL - FTP iconsDXMASF.DLL - Streaming iconsITSS.DLL - A homepage iconMSLWVTTS.DLL - A cartoon style talk bubble (yellow)QUARTZ.DLL - Media file icons, like the .wav iconODBCINT.DLL - The all time uglyfied ODBC database iconsMSRATING.DLL - Password icons from Windows and friendsSCROBJ.DLL - Scroll with a little wheelMSXML.DLL - XML icons from Internet ExplorerDESKCP16.DLL - Two monitors and a video cardCDFVIEW.DLL - Desktop icon, radar icon and some small book iconsMSHTML.DLL - The Internet Explorer iconsREGWIZC.DLL - Registration Wizard iconsFONTEXT.DLL - The font icons eg. font folder iconSETUPX.DLL - Windows Setup icons eg. the legendary animated drum icon, the drive icon, the animated search icon and moreINETCPLC.DLL - Misc. internet iconsSHDOCLC.DLL - Internet Explorer icons, a lock and a “clipboard to disk” iconDIGEST.DLL - Key with keyringIOSCLASS.DLL - Windows 95 style I/O unitsMODEMUI.DLL - Modem iconsNETDI.DLL - Windows 95 style “My Computer” iconMSPCIC.DLL - A PC-card iconWindowsKPCP32.DLL - An empty icon spaceMORICONS.DLL - Misc. DOS style iconsRUNDLL32.EXE - The Microsoft Windows LogoPROGMAN.EXE - Program Manager icons from Windows 3.xSharedMSONSEXT.DLL - The Webfolder iconsto forum · permalink · 2001-01-14 11:59:41 ·
      Forums OS and Software Microsoft HelpSaturday, 08-Dec 03:11:15 Terms of Use & Privacy | feedback | contact | Hosting by nac.net – DSL,Hosting & Co-loover 13 years online © 1999-2012 dslreports.com.
      Most commented news this week[92] Verizon DVR Would Study Your Behavior For Targeted Ads[88] Source: Charter Doing Away With Entire Social Media Department[67] Time Warner Cable Expands Metered Billing Nationally[63] Government Now Wants SMS Retention Laws[59] Google Won’t Include Phone in Google Fiber[56] Time Warner Cable: Demand Not There for Google Fiber[50] T-Mobile Finally Gets The iPhone[48] T-Mobile to Kill Subsidies Next Year[41] CWA Insists MetroPCS T-Mobiler Merger a Job Killer[35] Verizon Wireless: Everybody Else is Playing ‘Catch Up’Hot Topics (link) Just three truck rolls? Thats all? Sorry to say, but I've got ya beat. My service has been unstable since mid-Oc.’ [Comcast HSI]‘Black Box’ Data Recorders Required In All New Cars [Security]Cabinet Base Not Wide Enough [Home Improvement]Not new news, but still disturbing… [Security]The renovation continues … today new 400 amp service! [Home Improvement]

About Real-Time Advice

  • How breaking news — in the markets, Washington, and around the world — affects you and your money. Have a question about how current events may change your financial future? Email us at ask@smartmoney.com.