U.S. Senators Michael Bennet (D-CO) and Jeff Merkley (D-OR) called on the Securities and Exchange Commission (SEC) to finalize its crowdfunding rules that will allow small businesses and start-ups to raise capital online and through social media.
The senators were lead sponsors along with former Republican Massachusetts Senator Scott Brown on the bipartisan “Crowdfund Act,” which was passed on April 5, 2012 as part of the JOBS Act, which allows small businesses to raise start-up capital on the internet.
In a letter to SEC Chair Mary Jo White, the senators wrote, “The law directed the SEC to promulgate the necessary rules within 270 days of the enactment of the Act. The proposed rules, however, were not published for public comment until over 500 days later, on October 13, 2013. The comment period for the proposed rules closed on February 14, 2014. Despite the fact that finalizing the rules has been a stated Commission priority for all of 2014, the rules governing this crucial new source of financing have still not been finalized.”
The crowdfunding provisions signed into law provide an alternative to the process for small businesses to raise capital. They allow companies to raise up to $1,000,000 annually through internet websites registered with the SEC. The law requires the SEC to implement basic marketplace protections for the retail investors seeking to take advantage of this new marketplace.
Websites seeking to list companies must register with the regulators and provide investors the basic information about the companies they list. Crowdfunding platforms themselves must provide basic disclosures to investors and regulators.