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The Deal: States Greet Crowdfunding With Hostility

Some of the states are a little tougher, like Ohio, Massachusetts and Illinois, but others have been welcoming, Lipnick said.

For example, Lipnick said Crowd Alliance is working on a partnership with the state of Hawaii called Five M Bloom, which will allow Hawaii's entrepreneurs to raise money through crowdfunding that will be matched by the state.

They want "to allocate capital, dollar for dollar, to develop new companies in the state of Hawaii," he said.

Lipnick said Crowd Alliance is looking for investors for Five M Bloom. He declined to comment on how much Five M Bloom plans to raise. He said it would start small with low dollar amounts.

Crowd Alliance also is negotiating with representatives of New York Gov. Andrew Cuomo on a similar partnership in the Empire State.

Lipnick said the states have been understandably cool to crowdfunding because it is such a new business whose rules have yet to be written by the SEC.

"We're optimistic that once the rules are solidified, the states will be more receptive," he said. "They realize they have to create jobs. Let's do it the right way."

The right way to regulate crowdfunding remains a work in progress, according to Jilliene Helman, the CEO of RealtyMogul, a Beverly Hills, Calif.-based portal for real estate deals.

"To some extent, oversight is wonderful and we welcome it," she said. "We're going to hold ourselves accountable to our investors and customers."

The problem with Ohio's enforcement action against SoMoLend is that it cites behavior that's been going on for years, she said.

"There's been rampant general solicitation going on for 10 years at pitch events," Helman said. "What's not smart is a state going after things that have been happening for a long time, especially when the rules are going to change in a month.

"To use taxpayer money to go after people who have been trying to follow the rules doesn't seem like a good use of time," she said. "What would be better would be to establish a working relationship with the portals to make sure they get crowdfunding right, like the SEC did with peer-to-peer lending players like Lending Club and Prosper Marketplace."
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