On August 8, 2014, twenty-six Congressmen sent a letter to Securities and Exchange Commission (SEC) Chair Mary Jo White urging her to complete the “crowdfunding” rulemaking process as soon as practicable. The JOBS Act, which passed both houses of Congress with broad bipartisan support and was signed into law by President Obama on April 5, 2012, required the SEC to promulgate rules relating to these “crowdfunding” provisions by the end of 2012. The letter was constructed by Representatives Jared Polis (CO), Darrell Issa (CA), Scott Peters (CA) and Vern Buchanan (FL), co-chairs of the House Innovation and Entrepreneurship Caucus.
“A key feature of the JOBS Act was Title III, which was supposed to reduce the burdens and hurdles for US startups and entrepreneurs to gain access to critical new sources of capital from more modest investors,” the Representatives wrote. “Due in large part to the lack of finalized federal rulemaking, states are now leading the way, harnessing the power of new technologies to connect entrepreneurs with investors.”
“Crowdfunding” is a method of raising capital that aggregates many small contributions from donors who believe in the idea or business. This often allows innovative, disruptive start-ups and businesses access to funding that would have been more difficult or impossible to obtain from traditional sources. The SEC has now missed their legal deadline to promulgate these rules by more than 500 days.
Currently, at least seven states have enacted crowdfunding legislation and many others are considering such legislation, relying on the Securities Act intrastate exemption.
The signed letter is available here.