The Senate passed the JOBS Act on Friday 73 to 26, seeking to ease government red tape on small and start-up businesses. This raises many concerns.
The Senate passed the JOBS Act on Friday 73 to 26, seeking to ease government red tape on small and start-up businesses. This raises many concerns. The JOBS act allows for small business to get funding up to $1 million a year through an SEC-registered crowdfunding portal, which allegedly provides investor protections.
“Crowdfunding will allow small businesses to bypass Wall Street and go straight to Main Street for financing, freeing every American to invest in a local business or the next great idea,” Sen. Scott Brown, R-Mass., said following the vote.
The biggest concern is that if there isn’t enough regulation, it will end up giving a license to crooks who conjuring fake “small businesses” to rack up investor money under the guise of legitimate “crowdfunding”
I visited many of the crowdfunding sites and often wonder what happens after you back a project. With some of the game projects, you are promised early game access or some type of “reward.” On some sites, rewards cannot be given in the form of financial returns. However, will the JOBS act incentive a similar hedgefund model?
As most legislation, the devil is in the details. How this SEC crowdfunding portal “works” will determine how likely investors will be protected.
