… While skeptics point out there might be natural limits on how successful equity crowdfunding could be, the immediate reason for the holdup is the SEC.
The JOBS Act required the commission to create the rules governing equity crowdfunding within nine months of its passage. The SEC has missed its deadline, and it is not expected to complete the rules until late 2013 or early 2014.
The delays have dashed the hopes of entrepreneurs who hoped they would be able to launch their companies through equity crowdfunding, TeQuity president and co-founder Michael Abdy said.
“The act did provide false hope for a lot of startup companies in the sense it was supposed to be a solution to the gap a lot of these companies needed to fill,” Abdy said.
Despite the deadline set by Congress, it was foreseeable the SEC would struggle to meet the timeline, said Richard Levin, a lawyer specializing in representing early stage and public companies. Levin has extensive experience in securities law and working with regulators, and he says what’s happened with the JOBS Act is not out of the ordinary.