SEC Commissioner Daniel Gallagher gave a speech yesterday at the Vanderbilt Law School in Nashville. While the text of the speech is not yet available, Bloomberg has quoted the Commissioner on Title III of the JOBS Act as being smothered by red-tape. Effectively he is highlighting that a good policy idea has gone bad because crafted legislation did not have the experience and knowledge necessary to create a workable law.
“Crowdfunding is 1970s East Germany,” the Republican commissioner said in remarks for a conference at Vanderbilt Law School. “The heavy hand of the state is omnipresent and smothering.”
“The wisdom of the crowd has been displaced by the all-knowing Washington book club,” said Gallagher.
Of course Title III of the JOBS Act and its clumsy legislation is not a unique occurrence. Gallagher reflected that Congress made the task too difficult by burying policy under a mound of requirements and guidelines that has effectively killed Title III. The net effect is that Title III retail crowdfunding is not actionable today denying small business a vehicle to raise capital.
Many industry followers point blame at the Senate who added restrictions to the bill that came over from the House. With the Senate now under control of Republicans there is new found hope that Congress may give it another shot and fix the problems that were largely their creation. There are other crowdfunding advocates who believe the SEC could have unilaterally addressed such issues as portal liability and excessive cost.
The recently released rules on Title IV of the JOBS Act has reinvigorated an iota of hope that DC may be back on track in dealing with the many challenges small business face. The vast majority of jobs are created by SMEs in the US and thus are drivers of economic growth. Something both parties should support.