The SEC Is About To Make Crowdfunding More Expensive 366
PapayaSF writes "Proposed new rules require that funding portals register with the Securities and Exchange Commission and the Financial Intermediary Regulatory Authority. In addition, investors must have access to a business plan, use of proceeds, a valuation of the company, and financials, so Certified Public Accountants may be needed. The SEC estimates that for amounts under $100,000, the fees will be 12.9% to 39% of the money raised, though it may drop to under 8% for higher amounts. Is this needed regulation, or bureaucratic overreach?"
Overreach (Score:5, Insightful)
Re:Overreach (Score:4, Insightful)
It's overreach
Also known as "needed regulation" for a problem that does not exist.
Re:Overreach (Score:5, Insightful)
Also known as "needed regulation" for a problem that does not exist.
Precisely.
No mutual funds, retirement funds, or anything similar should have anything to do with crowdfunding. The SEC has no place here. Crowdfunding is similar to buying raffle tickets at a Church bazaar and the SEC has no business messing with those, either.
The SEC has more than enough to do with figuring out how to manage their direct mandate and prevent Big Finance from screwing us all over yet again with some new and clever shiny like the sub prime mortgage instruments, etc. They still need to clean their own house. And quit looking around for something to divert attention from they way that agency has managed to so fuck things up for 20 or more years.
Re: (Score:3, Interesting)
You should be fully aware that major investors and big finance companies and the major mutual fund houses really don't have any problems trying to invest in anything they want. Either those kind of investors have a senator or congressman in their pocket to make legal anything they want to do or at the very least a team of lawyers and accountants to bullshit their way into doing quite literally anything they want to do. In other words, the SEC doesn't really regulate "Big Finance" as you put it and any add
Re:Overreach (Score:5, Insightful)
This is all about small time investors and the attitude that somebody with a spare hundred dollars is incapable of being able to make an informed decision about a potential investment opportunity.
Sounds more like the attitude that somebody with a spare hundred dollars should give the government $12 before they do anything else with it..
Re:Overreach (Score:4)
This is all about small time investors and the attitude that somebody with a spare hundred dollars is incapable of being able to make an informed decision about a potential investment opportunity.
This is about making sure that somebody with a spare hundred dollars has the bare minimum information available to make an informed decision. It is analogous to standardized labeling requirements on groceries.
Because clearly the solution to this problem, like all problems, is ever more government intrusion. Big Brother must be allowed to protect us morons from ourselves. Someone has to do it, no?
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If there is a 12.9% to 39% fee on it by the SEC, then it is a bad decision.
The stupid in this thread is palpable. The SEC isn't taking any fees.
Those are the estimated costs for (1) the fee to the crowdfunding organizer, (2) cost to prepare forms and (3) cost to hire a CPA to audit the books.
Re:Overreach (Score:4, Informative)
Maybe it's bad writing,
It is bad writing. At least quote the article not what some random lamer wrote as their personal summary. None of this money is going to the SEC.
I think this story may have generated the most knee-jerking seen on slashdot in years.
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I can't count the number of times I've bought a raffle ticket for some worthy cause without bothering to see what the prize might be. That's not very informed, is it? Yet it makes more sense than wasting time gathering information about something when I know that there is zip nada nothing that I would find that would influence my decision.
The SEC has no business in this kind of transaction. Beggars, busking musicians, and crowdfunding entities all have this in common: even though money is being moved arou
#I need securities.... (Score:5, Insightful)
No mutual funds, retirement funds, or anything similar should have anything to do with crowdfunding. The SEC has no place here. Crowdfunding is similar to buying raffle tickets at a Church bazaar and the SEC has no business messing with those, either.
Sorry, nope. Prizes for a raffle should be obtained before tickets are sold, so that everyone knows what they're buying. I may not be guaranteed to win anything, but I know somebody will, and that the winning is determined by random chance. In crowdfunding, I may personally be taking a gamble, but if I "win", so does everybody else, and that winning is not regulated by chance, but by the ability of the project team to deliver.
These abilities vary from project to project, unlike the rules of statistics, which are universal. It is therefore vital that someone assesses the credentials of crowdfunding projects, rather than leaving uninformed members of the public confused and convinced by pseudo-scientific technobabble.
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that's just it.
unlike wall street, crowd funding is real investing. you are putting money into real people and real projects.
there is a good chance that those projects will fail. there is no money back guarantee.
Wall street however unless you are in the IPO you are not handing money over to a company you are just passing it to/from other investors. 99.9999999999% of the time had gotten it the same way. if I buy 1000 shares of company xzy at $10 a share the company doesn't get a check for $10,000. the c
Re:Overreach (Score:5, Informative)
It's overreach
Also known as "needed regulation" for a problem that does not exist.
If you would read the actual article, it was pointed out this is regulation that is being proposed because of a law which has already been passed by Congress & signed by President Obama that required the SEC to propose new rules for this kind of activity.
This is what you get when such laws get passed, and to get this "fixed", it will take going to the U.S. Congress to repeal the law that required this to happen in the first place. The overreach, as it were, is that the federal government is sticking its nose into regulating commercial activity in a manner that is unconstitutional in the first place..... but don't tell those who think the interstate commerce clause gives the federal government a blank check to do any damn thing it wants with regards to business activity.
The point of the Interstate Commerce Clause in the U.S. Constitution was to cut through regulations and to prevent states from prohibiting commercial activity between states. It was there to stop things like the tariff wars that happened between New York & New Jersey that nearly started the U.S. Civil War a few decades earlier with the fighting across the Hudson River instead of the Mason & Dixon line. How something designed to prevent a shooting war ends up regulating somebody trying to make a YouTube movie is utterly stupid.
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"The overreach, as it were, is that the federal government is sticking its nose into regulating commercial activity in a manner that is unconstitutional in the first place"
You better re-read the commerce clause, as what it states clearly falls under what is happening here - regulation of commerce between the states. Crowdfunding doesn't stay in one state, and thus the government has the right to control it.
I'm all against gov't overreach, but this is clearly stated in the constitution.
Re:Overreach (Score:4, Insightful)
No, this is a law that makes it legal to do something that was completely illegal before. Read the full article -- until the law was passed, it was totally illegal in the USA to sell shares in a new company by crowdsourcing. The new law makes it legal and directs the SEC to create rules under which it could happen. This is the rule the SEC is currently proposing.
So, far from fixing a non-existent problem, this law is fixing a problem that many of us in tech have said exists: that small companies cannot get their start up funds from crowdsourcing their IPOs.
I assume, armed with this new information, that you'll be cheering for President Obama taking action on this issue. I mean, there's a lot wrong with his administration, but at least blame him for things he's really screwed up, not for the stuff he's improved.
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It may be something of a sledgehammer to crack a nut, but the basic problem with crowdfunding at the moment is that there is no need to write a proper business plan. CLANG, for example should never have been allowed on a crowdfunding site, because while it appeals to the sort of person who sees computers as some kind of mystical magic, it was clear to anyone with any clue about technology that they it was going nowhere. Crowdfunding sites may have been able to head off regulation earlier if they had been pr
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It's the government's job to protect us from ourselves. Or so it thinks.
Or put another way, a regulatory agency exists to create regulations.
While I would agree that some regulations are necessary for a functional society, this ain't one of them. The people giving out money to Kickstarter and its ilk are not poor, not illiterate and they know what they're getting into. They're spending disposable income on toys and entertainment, not their rent money.
Personally I don't give money to crowfunding and my opini
Re:Overreach (Score:5, Informative)
I think you are over reacting. This basically has nothing to do with kickstarter or kickstarter like funding efforts unless they are selling parts of the company. Most kickstarters I've ever seen are selling a product (and sometimes not even that), not securities (shares of their company).
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Crowdfunding is exactly like Kickstarter, except instead of getting durable goods you get angel shares. It is supposed to be a way to be an angel investor in a startup without having millions of dollars.
Re:Overreach (Score:5, Informative)
I think you are over reacting. This basically has nothing to do with kickstarter or kickstarter like funding efforts unless they are selling parts of the company. Most kickstarters I've ever seen are selling a product (and sometimes not even that), not securities (shares of their company).
Correct. In fact, crowdfunding resulting in ownership is not yet allowed in the US. The legislation is being put forth to enable it. It can't make it "more expensive" if you can't presently do it.
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And here I thought conservatism was deeply unpopular on slashdot.
Re:Overreach (Score:4, Interesting)
This isn't about conservatism. I'm very much a liberal, but I still think that this sort of regulation is utterly stupid and harmful.
Re: (Score:3)
Except that there are plenty of libertarians who are consistent in not wanting something from the government.
In fact, even many of the liberals advocating big government programs are wealthy enough not to have to care; they advocate those programs out of ignorance and stupidity, not self-interest.
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well.. in cases where it is actually pre-sales of the product, then normal sales related taxes should apply imho.
Re:Overreach (Score:5, Insightful)
> It's overreach
I don't think so. The SEC regulates selling stock in companies and that is what they are doing here. It was less than a year ago that congress passed a law that would permit selling of shares via "crowdfunding." This is basically a way to solicit angel and first round investors. If a company wants that kind of money it seems to me that the stuff the SEC is requiring is a very reasonable bare minimum. Penny stocks are the playground of scammers, the SEC doesn't want the hype around crowdfunding to give them a new playground.
Re:Overreach (Score:5, Informative)
"Penny stocks are the playground of scammers..."
So is investment banking, apparently. Is this just another area the SEC can fail at?
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Another good thing would be if the SEC actually punished the guys who break the rules, instead of mostly just making them give back some of the money they made.
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What stock? Have you ever contributed to any Kickstarter project?
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Nevermind, I did actually RTFA now, and you're right. It really should be more clear from the summary, though.
Re:Overreach (Score:5, Informative)
If what you have received for your Kickstarter investments have been things like T-shirts or early releases of a game, then the SEC rules discussed in the article would not apply. These rules only apply if the crowdfunders are buying shares of the company.
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No. It's probably due to people screwing each other on both ends using things other than Kickstarter or indie gogo.
They're talking about securities. So, equity, stock or whatever. Someone probably screwed an unqualified investor out of a lot of money legally and they're looking to rectify that.
Re:Overreach (Score:4, Funny)
Bureaucrats need jobs because their entire sense of self worth depends on being given a place to drive to and sit at.
Door slamming shut (Score:5, Insightful)
That may be so, but what this amounts to is closing a door we just managed to open for small operations. Here we go again, only ops with access to big business resources will typically be able to meet these proposed criteria. If you had doubt that big business interests drive our legislation, this should help resolve those doubts. Small operations can pose a huge threat because they are, at times, considerably quicker off the mark than your average corporation with its bean counters, lawyers, middle management, reviews, and HR making sure you only get the most mediocre employees possible.
This is mommy government at its typical get-in-the-way pursuits. The problem is, aside from complaining in fora like this one, there isn't much we can do about it unless some interested party's got deeper pockets than the corporations. Not too likely, seems to me.
Nobody's shutting the doors (Score:3)
OTOH, some of the projects that got funded and failed did so because the creators didn't really plan ahead and didn't think about how much stuff really costs. This might put the breaks on that. You know, after the kickstarter is done the people don't sign a suicide pack and drink kool-aid in jonestown. Most of them take the work they've produced and try to get it on Steam. Tha
Re:Door slamming shut (Score:5, Insightful)
The article is not clear, but this is traditional investing via crowdsourcing. Selling securities or equity, like a normal IPO. This makes the same rules apply everywhere, and closes a loophole advantageous to people who could go the traditional route but decide not to.
Kickstarter, where you pre-order merchandise, does not seem to be affected.
Do you think the SEC should regulate investing any differently because it happens on the web? I'm assuming the answer is "oh, I misunderstood."
Re:Door slamming shut (Score:5, Informative)
I'm assuming the answer is "oh, I misunderstood."
(c) Neither the summary nor the article were particularly clear on whether these new rules would apply to Kickstarter-style merchandise pre-order crowdfunding. Reading the proposal [sec.gov], it becomes clear that the new rules would apply to the sale of securities that provide the investor a possible return in the form of a share of future revenue or profits.
Uh, no... (Score:4, Insightful)
Police measure crime rates. The Fed Reserve can measure economic growth. And the SEC can measure how much money was lost by investors on shoddy investments.
A bit more regulation before the housing bust woulda been nice. Anyone remember Glass-Seagal? As Liz Warren pointed out we had 50 years w/o a major bust until we repealed that...
Re: Overreach (Score:2)
It's an overreach *around*.
39%? Yikes! (Score:4, Insightful)
There should be an upper limit, perhaps around 10% of revenues.
Re: (Score:2)
Even at the lower rate of 13%, as it is about 10-20% of money raised falls through, and then the platform used takes around 10%. So if you raise $100k, then you might only get around $67k.
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The SEC is only involved in *publicly traded* companies, so I don't see how kickstarter qualifies, UNLESS they're registered as S-Corps, which would be really really stupid, as they only allow 100 max investors.
Re:39%? Yikes! (Score:4, Informative)
So the solution (Score:5, Insightful)
So the solution is to just use croudsourcing outside of the US? If you want to start a croudsourced business, move to Canada or elsewhere in the world?
Re:So the solution (Score:5, Funny)
Outsourcing crowdsourcing? What sourcery is this?
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Re:So the solution (Score:4, Interesting)
They're already here.
http://www.kickstarter.com/canada [kickstarter.com]
You have money (Score:3, Insightful)
They will get it
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Cynicism is an input as well as an output. Caveat inputer.
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That's why we can't have nice things. (Score:2, Insightful)
And what will we be getting in return for their wise and valuable oversight?
Re:That's why we can't have nice things. (Score:5, Informative)
And what will we be getting in return for their wise and valuable oversight?
You will get to know how much money is being brought in, and how much is being spent. If that's worth it, I don't know, but that's the answer to your question.
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As a minor correction, you get a report of what the company wants you to believe is the flow of the money coming in, and the money leaving the company, and possibly how it is being used internally. It is hoped, in many cases, that what is reported has a basis in the reality of cash or money flowing through the company, but the evaluation of reported cash flow, to actual cash flow, is what a financially audit is used to determine. (Note that there are significant penalties for having a significant difference
Thanks Government (Score:3, Insightful)
Fuck. If a company can put all of that together, they probably don't need crowdfunding in the first place. That's the ENTIRE POINT of having kickstarter in the first place! For ideas by small groups or single people who have nothing but a good idea. Everyone donating already understands the risk.
Re:Thanks Government (Score:5, Informative)
This doesn't effect Kickstarter. The SEC only cares about crowd funded securities. I don't know of any kickstarter campaigns that gave stock as a reward.
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Re:Thanks Government (Score:4, Funny)
The first line of the "Background" section.
FFS. does anyone read the article anymore?
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Re:Thanks Government (Score:5, Informative)
Where do you see that in the article?
Paragraph 3, sentence 1: "The legislation requires that the selling of crowdfund securities take place on registered websites" (emphasis mine).
Re:Thanks Government (Score:5, Insightful)
You're bringing facts into a thread dedicated to foaming about a flamebait[1] summary and how the government is inherently evil.
[1] I almost wrote "clickbait", but clearly hardly anyone's clicked it.
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This doesn't effect Kickstarter. The SEC only cares about crowd funded securities. I don't know of any kickstarter campaigns that gave stock as a reward.
Equity (=shares) is only one kind of security (otherwise they wouldn't have so many terms!). In a Kickstarter campaign, you give money for something that doesn't exist, establishing a debt. Does that debt qualify as a debt security? Probably not, as securities are by definition tradable, and there is no explicit mechanism in Kickstarter for the trading of debt -- you can promise your reward to someone else, but the obligation to fulfill rests with you and the third party has no direct involvement with the K
Re:Thanks Government (Score:5, Insightful)
If a company can put all of that together, they probably don't need crowdfunding in the first place. That's the ENTIRE POINT of having kickstarter in the first place!
This has nothing to do with Kickstarter. This is about selling SHARES in these companies, not about prepaying for potential products. I'm no expert, but best as I can tell this rules will have zero effect on crowd-funding as sites like kickstarter and indiegogo have been doing it.
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I would suggest you read this article [crowdfundinsider.com] for more details. It most definitely involves Kickstarter and similar websites, as the regulations are about how those websites are required to hire accountants and lawyers to review every project..... or simply kick the door down and let every possible person set up a project.
Specifically, if one of these crowdfunding portals does any sort of culling of a project (including filtering out obvious trolls proposing patent nonsense or gibberish), they must hire these peop
Re:Thanks Government (Score:4, Informative)
My next kickstarter was going to promise selling shares in the company to major backers!
Surprises me nobody has done that yet. Or at least I haven't noticed it.
Nobody has done it yet because it has been illegal all this time. These are the rules the SEC was instructed to create by congress in the JOBS Act of 2012 (Jumpstart Our Business Startups Act) which made it legal to shell shares via crowdfunding.
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As the bankers Get Out Of Jail Free.
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Perhaps not such a big deal (Score:5, Insightful)
Having not read the actual legislation, the following quote from the article seems quite important: "The legislation requires that the selling of crowdfund securities take place on registered websites."
Notice the phase "selling of crowdfund securities." I think that most crowd funding doesn't involve the sale of securites and in fact most are just clever ways of pre-selling merchandise not yet made without having to give away any equity at all.
Although I could be talking complete nonsense.
Re:Perhaps not such a big deal (Score:5, Informative)
Right now, if you want to crowdfund something and give the funders stock, you can't do it. After this change, you will be able to (but if you aren't giving stock, you can do what you were doing before).
Yeah, that's it. More taxes for start-ups. (Score:3)
What a way to generate more jobs and businesses.
Fuckers.
I think this isn't talking about Kickstarter (Score:5, Insightful)
I'm not completely sure, but I think the SEC is talking about situations where a company avoids the traditional IPO process and instead "crowdfunds" the sale of securities in their company [bankrate.com] (either debt or equity). Kickstarter is generally different, because the return on "investment" is in the form of a set non-monetary reward that is more similar to a purchase than an investment.
What is needed, though, is some clarity in the rulemaking process to ensure that Kickstarter and other similar sites can feel comfortable that they are not at risk of being caught up in this net.
Re:I think this isn't talking about Kickstarter (Score:5, Informative)
Heaven forbid anyone read the actual source material.
Looking at just the article, it's hard to imagine this applies to people kicking in 20 bucks to get access to some doodad. Looks like it's more geared towards people raising lots of money in exchange for equity of some kind. Hence, security. Think the film UHF, less Pebble. Also given they are talking about income slices between 100k, 500k, and a million dollars.
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The three scales, 100k, 500k and 1M, are the points at which certain accounting and audit requirements kick in. At 1M, the full bank of requirements has kicked in and are applicable no matter how far above that limit you get. Maybe there should be a 250M and 1B point with even more requirements, but the SEC seems to think that everything they need at 1B is answered by the requirements at 1M.
Which makes sense since that's what the SEC does (Score:5, Informative)
The "S" in SEC stands for Securities. It is their job to regulate that kind of thing.
As you say, Kickstarter is different. Not only are you not getting any equity in the company, you aren't getting any financial stake in the project or anything. It is an investment for creative return, not financial, and thus not something that would be covered.
You need to pay income tax on Kickstarter funds, of course, but that's all. They aren't an investment as far as the SEC is concerned.
wrong focus (Score:3)
instead of going after crowdfunding efforts, how about they go back to preventing Wall Street and banks from causing another global collapse? HFT is much more of threat and far more harmful than any crowdfunding effort.
priorities, motherfuckers, fix them.
Re: (Score:3)
They're trying.
The Volcker Rule just passed a huge hurdle in the courts. However, reenacting the whole swatch of protections is going to take an act of Congress to reenact the Glass-Steagal act.
HFT just might not be a priority though.
This is investment, not "donating". (Score:2)
This is the next step up from the "gimme, gimme" level of Kickstarter. You can still do Kickstarter projects, but now there's a tier above that, for when you need $1M or so.
It's overreach (Score:2)
On the other hand, there's no fraud here, no one on kickstarter is claiming to know what they're doing. Also, the job of the SEC is to prevent financial fraud, not to prevent fools from b
Necessary Regulation (Score:2)
Necessary Regulation is that which spontaneously develops in the free market; consider, for example, the Underwriters Laboratories (UL) [wikipedia.org].
Can't you just leave us the fsck alone!
Probably needed (Score:2)
I don't know what the track record w.r.t. scams is so far, but it's just a matter of time until the con artists start trying to take the money and run.
Where there's money, there's crooks.
Misleading summary (Score:5, Informative)
If you actually bother to read the Federal Register text [federalregister.gov], you can see in the second paragraph of the introduction that the JOBS Act, and this subsequent regulatory structure, only applies to crowdfunding where the reward is a security. It specifically explains that this is different from the current model of crowdfunding in the U.S., where the donors receive some "token of value" related to the project, not a share of future financial returns. The SEC isn't trying to regulate the current system, but is trying (as directed by that law) to allow crowdfunding where the donor award is a security; the current regulatory structure, based on the Securities Act, largely makes this sort of model impossible due to the various requirements of public offerings.
So, there's nothing to get up in arms about. This is just a move by the SEC to allow something that isn't currently permissible under U.S. law, not an attempt to "tax Kickstarter" or "regulate Indiegogo" or whatever other nonsense people claim.
Re:Misleading summary (Score:5, Insightful)
But is trying (as directed by that law) to allow crowdfunding where the donor award is a security; the current regulatory structure, based on the Securities Act, largely makes this sort of model impossible due to the various requirements of public offerings.
If so... it's an improvement.... but the requirement that the entrepreneur front, essentially 39% of the funds, to raise less than $100K.. would appear to be unduly burdensome. The requirement for a CPA audit would also appear to be unduly burdensome.
The person raising this money, should have a less-expensive option: that does not require losing a significant amount of their funding. And they should have an option of disclosing that no audit has been or will be performed.
Whether no audit makes the offer unsatisfactory or not, should be the decision of potential investors, to be made based on their careful judgement in selecting potential investments, not the federal government.
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CONSTRUCTIVE BAN (Score:2)
By definition... funding through such sites as Kickstarter --- is not an investment. There is no equity. There is a small reward.
True investments involve equity.
Nobody in their right mind would go to crowdfunding, if the person has to front want amounts to 39% of the funds they might raise (if successful). Even 5% is unduly burdensome.
The SEC's proposed regulation amounts TO A CONSTRUCTIVE BAN on crowdfunding.
The proposed regulation incurs costs that are so UNDULY CRIPPLING upon ent
Misleading, Wrong kind of Crowdfunding (Score:4, Informative)
This is NOT about Kickstarter and other crowdfunding project sources. This is about INVESTMENT CROWDFUNDING, which is very different and yes is regulated.
Kickstarter etc typs Crowdfunding: You give money and get a product in return, or whatever was offered at your level of funding you gave.
Investment Crowdfunding: offering an actual return on investment in exchange for funding, such as shares in the company, a portion of the profits, etc. which are things that do fall under the normal purview of the SEC.
Way to not do your homework submitter. Nothing to see here folks, move along.
Bureaucratic overreach? (Score:2)
No, it's not bureaucratic overreach.
Think about what kickstarter allows a normal person to do. If you have a great idea, or even a not so great, but highly marketable idea, it allows you to go outside of the established funding and control models which have been the norm for decades.
Ultimately, the current model ensures that the establishment is in control of your idea and your future. Unless you already had money of course, in which case you can avoid investors.
For the regulators, and the monetary elite w
Appropriate for large $ funding efforts (Score:2)
This a result of the increasing size of the asks from crowdsourcing. I hope the outcome is that crowdsourcing regulations define a reasonable 'small venture' definition, and put the focus back on funding individual ideas rather than whole start-ups. In my opinion, Kickstarter is not the right place to raise millions of dollars. Managing a multi-million dollar venture does require overhead and proper accounting, which these proposed regulations acknowledge. Most of us just don't have to deal with it, so we t
Necessary ... (Score:2)
Sure, you have to protect big companies from those pesky garage developers threatening their income by developing innovative, affordable new stuff ...
Too damn funny (Score:2)
This isn't about Kickstarter (Score:4, Interesting)
This is about selling shares: Crowd-sourced investing.
However, this sort of thing may come to other types of crowd funding.
I'm not sure what the answer will be if they require you to already have a business setup to do a Kickstarter. Business registration, incorporation, trademark registry, etc. is whole reason I'd even do a Kickstarter in the first place.
Perhaps we'll start to see 501(c)3 businesses that you can donate towards, who divide the money amongst projects? It would then be basically the same as kickstarter, except you don't get your pledge back if the project doesn't meet its goal -- You'd have a credit to apply it to another project instead.
What we really need is to put starving artists on the endangered species list, or maybe start a fake Fascist Hate Group that wears plaid Hoods and hates art. Then we can get some anti-discrimination laws for artists, as well as artist-shelters just for the down and out and artistically gifted. Anyone who says their art stinks can be accused as being an art-hater. There could even be 12 step self help programs for victims of artistic abuse. We could get even get funds to research cures for the artistically impaired. Those Kickstarter people are thinking small, if the government is getting involved, we need to play the government's game: Scaremongering to protect women and children's art from the evil plaid philistines.
It's a symptom (Score:2)
The problem is that the SEC is truly powerless against the big bank wall street criminals, who they don't want to prosecute anyway to protect their jobs. So in order to justify their existence and feel special they have to clamp down on the small fry.
please take down this thread - it's misleading (Score:5, Informative)
not about crowdfunding as we know it AT ALL.
it's about different kind of crowd funding where you're participating in shares.
No. Wrong. Fail. (Score:3)
The SEC is about to make equity crowdfunding possible. It is not possible at all at present, and business plan, etc., seems entirely appropriate for equity investors. Current crowdfunding is not equity investment at all, it is either pre-order (by my understanding typical on Kickstarter) or a gift (by my understanding typical on IndieGoGo). My understanding is that the SEC rules will not affect those two modes of crowdfunding at all.
So this is a good thing. The Slashdot summary... not so much.
Re: (Score:3)
Mod parent up. He's right. Slashdot edit staff FAIL.
Re:sounds like! (Score:5, Insightful)
Or maybe big business trying to squash competitors.
While one often imagines left-leaning socialists wanting more regulations on everything, many times such legislation is merely big companies lobbying to stifle smaller companies, or even big competitors in slightly different industry categories.
In Utah, some big companies lobbied to regulate the cosmetic industry in a way that put a lot of mom-and-pop beauty salons out of business. Thus, people would go to big-co franchises instead. (That's why Utahians are so ugly :-) .... just kiddin'
Businesses only hate regulations that hurt themselves, but love regulations that stifle competition.
Existing patent laws appear to be a form of this: they favor big patent portfolios and big lawyers, because smaller companies and individuals don't have the lobbying money behind them to make the patent rules more small-company-friendly.
Re:sounds like! (Score:4, Interesting)
Set up a company in a more start up friendly part of the world and see how that works out in the digital age.
With todays faster broadband - art, music, design, code, languages, support and unique skills can be pulled together from around the world at lower prices.
Why not just create not the entire project in a more understand area of the world?
Re:sounds like! (Score:5, Informative)
The US toy safety regulations are a commonly cited example. Following the scandal involving lead paint being used on toys imported from China, the US passed strict safety regulations for toys in the Consumer Product Safety Improvement Act. Well-intentioned, but they also cost a fair bit to follow - every new model of every toy needs to be sent to an independant inspector to run everything from mechanical tests to chemical analysis of the plastic. This is small change to a toy manufacturing giant, but a crippling expense to a small business. There's an exception to some of the regulations for those manufacturers who register as a 'small batch manufacturer,' but it's still more paoerwork overhead.
There's also some speculation about very small scale - there's no exception for nonprofits. If you were to knit some toys to sell at a charity event, that's now a felony - you can't see toys that havn't been subjected to the required safety testing. Up to a five year jail term. In practice regulatory generally know that this is one of the cases where actually enforcing the law would be silly, but such 'informal exemptions' are not good legal practice.
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Capitalism is predicated on voluntary exchange.
Um... How is this "capitalism" again?
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There's a reason that George Orwell's 1984 prominently features the redefinition of language.
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