The SEC is Finally Working on Crowdfunding Regulations

When Arkansas Business' Jan Cottingham wrote about crowdfunding in Arkansas in May, she noted that regulatory work toward equity crowdfunding, or securities crowdfunding, had stalled.

Equity crowdfunding was part of the bipartisan Jumpstart Our Business Startups Act — or JOBS Act — approved by Congress more than a year ago. It was designed to help small business gain access to capital.

But the federal Securities & Exchange Commission had so far failed to write the regulations that would let “non-accredited” investors — those who don’t have a high net worth — buy equity stakes, leaving those non-accredited investors shut out of equity crowdfunding.

But according to the Wall Street Journal, the SEC has finally moved on writing those regulations:

The Securities and Exchange Commission voted 5-0 to propose rules aimed at helping startups sell shares through online "portals," where supporters say thousands of investors could pore over the business plans of small companies and choose promising investments. The proposal would implement a key provision from last year's Jumpstart Our Business Startups Act, a law meant to spur business activity.

"We want this market to thrive, in a safe manner for investors," SEC Chairman Mary Jo White said.

Critics point to risks, including exposing unsophisticated investors to fraud. But proponents say the move will be great for small startups who would be able to quickly and more efficiently raise money from a wider pool of investors.