Entrepreneurs Watch As Crowdvesting Bill Stalls In Senate 182
cayenne8 writes "The JOBS Act bill, passed in the house, has stalled in the senate. One section of this bill, which would legalize 'Crowdsourcing' in the U.S., as it is in other countries, allowing companies and startups (like indie film makers) to solicit investments for profit over the internet. This differs from sites like Kickstarter, which allow you to only donate money, in that this bill will allow the common citizen to invest for potential profit ($10K or 10% of income for investor limits) in new ideas and companies."
When was it made illegal? (Score:5, Interesting)
Why was Profiting from Crowdsourcing a movie, song, or book made illegal? And when did it happen.
Scam? (Score:5, Interesting)
"Of course, supporters don’t describe it that way. They say the JOBS Act — for Jumpstart our Business Startups — would remove burdensome regulations that they claim have made it too difficult for companies to raise money from investors, impeding their ability to grow and hire.
Never mind that reams of Congressional testimony, market analysis and academic research have shown that regulation has not been an impediment to raising capital. In fact, too little regulation has been at the root of all recent bubbles and bursts — the dot-com crash, Enron, the mortgage meltdown. Those free-for-alls created jobs and then imploded, causing mass joblessness. "
https://www.nytimes.com/2012/03/11/opinion/sunday/washington-has-a-very-short-memory.html?_r=3&partner=rssnyt&emc=rss [nytimes.com]
Outdated information (Score:5, Interesting)
http://news.cnet.com/8301-1001_3-57402589-92/jobs-act-clears-senate-one-step-from-becoming-law/ [cnet.com]
The JOBS Act has passed the Senate. In a 73 to 26 vote today, an amended version of H.R. 3606, which opens startup investing to individuals ("crowdfunding") and gives young companies more flexibility in filing to enter the public stock markets, cleared what is probably its last major hurdle before becoming law.
I'm really surprised that it passed the Senate as the JOBS act is chock full of poorly thought out deregulation.
It's so bad that the head of the SEC has come out against it [washingtonpost.com] and State securities regulators are against the bill [reuters.com]
If this bill becomes law, it'll directly lead to the next wave of investor fraud.
Re:When was it made illegal? (Score:5, Interesting)
Crowdsourcing in general is illegal because of hucksters tricking people out of their investment dollars.
Right. There is a long, long history of investment scams, from John Law's bank to Florida real estate to "High Yield Investment Plans. The current big scam thing is "distressed real estate". That's why we have SEC registration and mandatory disclosures. Here are some recent scams of that type. [securities...d-blog.com]
"Crowdfunding" is about selling unregistered securities to individuals. This usually ends badly.
If anything, the rules on who is a "qualified investor" and can invest in private placements should be tightened up. At present, pension funds are considered "qualified investors", which means they can invest in hedge funds. That didn't work out too well around 2008.
Re:Scam? (Score:4, Interesting)
During George "duh" Bush's administration the number of regulations increased from 110,000 to 150,000 pages. The New York Times must be using a definition of the word "deregulation" that I am not familiar with, because I would call a ~50% increase in regulations the Exact Opposite of deregulation.
I cannot comment of the dot-com or enron debacles, but it is very clear to me the mortgage bubble was created by the Government, its Fannie/Freddie organizations, and the private bank monopoly known as the Fed. They colluded with one another to provide tons of cheap low-interest loans, and that fueled the rapid rise in demand for limited housing, and eventual burst of the bubble in 2007-8. If anything it was TOO MUCH regulation (Congress insisting everyone should get a mortgage, even if they were too poor to pay it back).