The New York State Society of CPAs is calling on the Securities and Exchange Commission to tighten its proposed regulations on crowdfunding, arguing the proposals would loosen the rules to the detriment of unwary investors.
The SEC drew up the proposed regulations in response to the Jumpstart Our Business Startups Act, or JOBS Act, which was signed into law by President Obama in 2012 with the goal of encouraging funding of small businesses in the U.S. by easing various securities and regulations. Among the provisions of the JOBS Act was rules allowing so-called crowdfunding, which allows companies to sell securities through open platforms, including Web-based programs, modeled after sites such as Kickstarter and Indiegogo that allow entrepreneurs and artists to get funding for their projects and ventures. The law requires the SEC to write rules and issue studies on capital formation, disclosure and registration requirements.
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