This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How the Government Let Us Down on Crowdfunding -- Today's Outrage

NEW YORK ( TheStreet) -- The Securities and Exchange Commission sure loves the big headlines it gets when going after Wall Street, but the agency's foot-dragging over the JOBS Act is just another example of the government letting the rest us down.

And President Obama's nomination of a former federal prosecutor as the next SEC chairman does little to show that he's serious about forcing the agency to implement an important measure that could spur a major economic expansion.

The SEC broke the law by missing its Dec. 31 deadline for finalizing rules that would foster the expansion of small businesses and the creation of jobs. And we might have to wait another year for the Securities and Exchange Commission to do its own job to implement the JOBS Act.

The Jumpstart Our Business Startups Act was signed into law by Obama last April with strong bipartisan support, which is unusual in Washington these days, and underscores the Act's importance at a time when initial public offerings by U.S. companies have slowed and banks are being careful in making loans.

The JOBS Act is meant to spur investment in smaller companies by easing securities registration and reporting requirements, while also opening up fundraising away from traditional markets by allowing entrepreneurs to raise up to $1 million in a 12-month period through crowdfunding.

Funding for small businesses and startup companies that aren't ready to go to the public markets has traditionally been limited to venture capital firms, private equity firms and wealthy individuals known as "accredited investors." The point of crowdfunding is to allow "ordinary" investors to make equity or debit investments in small businesses. This promises a large new source of investment capital for expanding businesses at a smaller cost than equity or debt filing with the SEC.

Regulatory Delay

The SEC was mandated under the JOBS Act to finalize rules to allow crowdfunding by Dec. 31. The Wall Street Journal in December reported that the outgoing SEC chairman had delayed proposing rules to end the ban on general solicitation for investments because of concern over her legacy for protecting investors, and "interference" from consumer groups, concerned that opening up the flood gates for investment could lead to widespread fraud.

While it might not be fair to comment on a federal official's concern over her legacy, there's no question that the SEC has failed to meet its legal mandate to implement the JOBS Act.

President Obama last week nominated former federal prosecutor Mary Jo White to serve as the next permanent SEC chairman.

Michael Zuppone, a partner in the corporate practice of Paul Hastings in New York, says "the SEC staff is working hard at crafting proposed regulations," but that it is "no surprise" that the agency missed the year-end deadline. In addition to Schapiro's departure, Meredith Cross also resigned. She was the SEC's director of the Division of Corporate Finance, who was leading the agency's implementation of the Dodd-Frank banking reform legislation, as well as the JOBS Act.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs