A Community of Entrepreneurs, Startups and Investors Endorse Action
At a time when we are all opening “Happy Holidays” letters from family and friends, the SEC received yet another letter from the equity crowdfunding community – but this letter was not filled with cheer. And it was a lot thicker than the last one. Why? It’s not because they stuffed a gift card inside. It’s because of the extra pages needed to make room for the Engine’s SEC letter containing over 200 signatures from fed up entrepreneurs, startups and investors from all over the United States.
If you can remember back to the sun-filled days of August, we published a blog titled “Dear SEC: You are 500 Days Late on Equity Crowdfunding.” In fact, it was published on August 18th, almost four months to the day. As we approached autumn we were all growing a little upset that the enactment of Title III equity crowdfunding had made it past summer. However, no one was as upset as one man, StartEngine CEO Ron Miller, who led a movement to shake up the SEC.
Part of Ron Miller’s stand against the SEC involved submitting comment letters to the SEC.
Miller personally reached out to platform CEO’s and influential crowdfunding community members to write a detailed and lengthy letter asking for Title III to be enacted. Each letter was to contain the following:
-Title III platform can operate under the rules as proposed
-Costs to issues are much lower than stated in the proposed rules
-While you would like to see some changes in the future, the proposed rules are workable and you intend to launch your platform to facilitate Title III crowdfunding
Miller also asked his supporters to write their congressman and two senators and urge them to write personal letters to Chair Mary Jo White as well.
Flash forward to today, December 19th, and nothing has really changed except for some equity crowdfunding rumors being thrown around. No concrete date has been provided expect for the October 2015 projection the SEC is required to give us. As the disbelief and frustration of the Title III debacle comes to a head in 2014, The Engine Research Foundation organized an online movement to once again show the SEC we are ready for equity crowdfunding. And a petition with over 200 signatures can’t be ignored.
Hosted on their website, the SEC equity crowdfunding petition is still live although the letter was sent on Monday, December 15th. Here is the actual letter Engine sent to the SEC:
Dear Chair White:
We are a diverse group of entrepreneurs, startups, and investors. We represent America’s startups, the key drivers of job creation across the country. On average, our community creates 3 million jobs a year.
Before the Jumpstart Our Business Startups (JOBS) Act was enacted in 2012, many of us wrote to the SEC expressing our enthusiasm for the bill. As you know, some provisions of the Act have already provided new opportunities for emerging businesses to pursue initial public offerings. However, other opportunities intended to spur investment and participation in the startup economy remain out of reach because key features of the JOBS Act require SEC rulemaking in order to take effect. This rulemaking is now long overdue.
One such example is Title III, the much-anticipated crowdfunding provision. When Congress passed this bill with resounding bipartisan support, it recognized the potential of crowdfunding to enable entrepreneurial innovation from a diverse range of citizens. Although the Commission proposed rules in October 2013—nearly a year past the statutory deadline—the Commission still has yet to adopt them, eight months after the comment period has closed.
Rules to add a new category of public offerings exempt from registration, known as Regulation A+, also await final ruling. And further, Title II rules allowing companies to solicit investors and publicly advertise certain offerings have been proposed, but they ignore Congress’ original intent and we believe could result in onerous red tape for entrepreneurs.
While we remain excited about the Act’s potential to stimulate growth across America, we are frustrated by the Commission’s failure to uphold its end of the statutory bargain. We urge you to complete the rulemaking process as enumerated in the law without further delay for Titles III and IV. Moreover, we strongly urge you to enforce Title II without the additional hurdles for investors proposed by the former commission.
For the sake of economic growth and innovation, we want to emphasize how critical it is for the SEC to finalize the remaining rules as soon as practicable.
As powerful as the content of this letter and amount of signatures appear to be, it seems no immediate impact has been made. An American Banker crowdfunding article released yesterday spoke on the letter and offered an all too familiar response from SEC Advisory Committee Chair Mary Jo White:
“Completion of these rulemakings remains an important priority and the staff is working hard on the recommendations for the final rules.”
Title III enactment in 2014 can be written off completely, but the amount of support the Engine letter received is another great sign for the industry. The entire community is standing as one to make Title III a reality and by making a strong statement in December 2014 we enter 2015 riding a high. The volume of support will only grow larger, the noise we make will only get louder, and at some point, we will be impossible to ignore.
If you would like to join the Title III equity crowdfunding movement on Twitter, here is the hashtag and link to the page: #JOBSActNow
Thank you again for reading and please leave your comments below!