Funding from the masses for the masses?!

Funding from the masses for the masses?!

I recently read another article about the debate around Crowdfunding and it certainly is timely considering the SEC was given a deadline of January 1st 2013 to come up with the rules that would govern the ability of unaccredited investors to participate in this highly innovative approach to funding new startup business ideas. If you aren't aware of crowdfunding then your not alone and it seems that most insurers are not familiar with crowdfunding and many insurers have not even heard of it. That is what has been causing the hold up with any SEC decision. From my opinion I think the old guard might not have been the best choice. I think we will see the peril of bureaucracy once again stand in the way of progress and innovation here.

I recently checked out the SEC site to see where they were on their decision because I was introduced to the idea a few years back on a trip to silicon valley and have been very interested with the idea and its potential since then. What I found on the website was laughable, mostly because in my opinion it represents old style in the box thinking which is very counter-intuitive with such an outside of the box concept. I believe it was Einstein who said “We can't solve problems by using the same kind of thinking we used when we created them.” The irony is that the main reason for the creation of the SEC was to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. hmmmm! Wait a minute one of these things is not like the other! Of coarse I am referring to the intention and the outcome. Still not sure why the SEC was given the complete responsibility to come up with the rules in the first place. Seems to me they have some internal problems they need to work through first. It's all ridiculous if you ask me.

Personally as an entrepreneur and start up business owner with an outside of the box idea myself I was initially happy last year in April when I heard that the US president Barack Obama had signed the JOBS (Jumpstart Our Business Startups) act because the legislation effectively lifts a previous ban against public solicitation for private companies raising funds. The president gave the SEC a deadline to come up with the rules and for that reason I can't say that I am surprised with the delay. One typically has to understand a concept in order to regulate it right? Actually the last financial meltdown and mortgage back securities proved otherwise so the only other conclusion I can make is that no one has come up with a way to ensure passing rules and regulations that only the most highly sophisticated wall street scam artist could then manipulate for their personal gain and come on people that takes time.

You can see a draft of the proposed rules here, and the Insurance Industry Summary here and link to all of the documents on the subject here. Happy reading!