PBR, Revisited

One of our favorite posts of 2011 dealt with the inability of some ambitious entrepreneurs to amass capital for a buyout of their favorite brewer due to regulatory rules surrounding solicitations and offerings. While it is important to have a regulatory regime in place to protect investors from themselves, we noted in that post that it was also unfortunate that innovative strategies such as crowdsourcing couldn't be used for investment purposes. However, in an interesting twist, The Financial Times is reporting that The White House has thrown its support behind a bill which would allow the strategy going forward.

The White House-backed JOBS act, which recently passed the House by an overwhelming 390-23 margin, has a provision which, pertinent to our discussion, allows the solicitation of funds over the internet in a strategy the bill labels 'crowdfunding.' It also ends an SEC ban on small company advertisements to solicit capital, increases the offering threshold from $5 million to $50 million before SEC registration is required and raises the shareholder registration requirement from 500 to 1,000 shareholders.

While this can be viewed as a positive from the perspective of would-be crowdsourcers (or crowdfunders in the legislation), the SEC and labor have come out against the changes, and the Senate has yet to vote on a bill with some very different language. However, as noted, The White House is in favor of the House version, as, despite Republican ownership of the bill, it is viewed as a positive for economic growth. Whether or not crowdsourcing will soon become a possibility is unclear, but it is good to see efforts being made at innovation. We will try to keep our readers posted on any updates.

No comments:

Post a Comment