Last Friday, I listened to a speech by Roel Campos, former Commissioner of the SEC. Roel was speaking to hundreds of entrepreneurs and Chief Executive Officers at CEO Space International’s Free Enterprise Forum in Las Vegas on the topic “Crowd Funding 101.”
As former Commissioner of the Securities and Exchange Commission, Roel has an inside ear to what is going on with the April 5th JOBS Act (Jumpstart Our Business Startups) and its implementation by the SEC.
What we all wanted to know is how soon will the law go into effect. While minor provisions are already technically in effect, full details of how it will be implemented are not expected until November. Roel further stated that come November, the SEC may ask for an extension as they are already understaffed due to having to implement Dodd-Frank financial regulations and no additional funding has been provided to implement the crowd funding portion of the JOBS Act. On the other hand, they recognize that this is intended to help grow small businesses that will eventually be responsible for creating the millions of jobs this country needs to reemploy 23 million unemployed and underemployed Americans. The small business sector really needs this bill.
The SEC is notoriously tight belted, as one might expect from an organization of lawyers, and it sounds like in practice they will not give entrepreneurs many of the capital raising freedoms intended by the law for fear of fraud. However, they are planning to increase the number of private investors who are unsophisticated that can sign on to a private placement, and may create loopholes to allow very small investments without complex reporting. Roel referred to this as “Reg A Plus.”
I am not happy with the news of delays and restrictions, but Roel stated it is very important for entrepreneurs like us to communicate with the SEC about what we want the implementation of the JOBS Act to look like and what will help us create jobs and do our jobs. Feedback really does make a difference in how openly they tailor laws.
I recently watched this two hour video of the House Resource Committee discussing issues related to crowd funding prior to the signing of the JOBS Act, which I strongly recommend for anyone looking to finance a business under the new law. With debt markets still pretty much frozen, this lower end equity loophole option could change the future of your entertainment project or business! The video:
Crowdfunding: Connecting Investors and Job Creators.
Learn more about CEO Space.
A link to the JOBS Act in PDF format.
How to contact the SEC.