This week has been a good week for the SEC, mostly in the sense that they aren’t the IRS (please don’t audit me). But it hasn’t been a good week for the millions of entrepreneurs and investors still waiting for the SEC to finalize the rules for the securities-based crowdfunding established by last year’s JOBS act. Every day that goes by without rules means more businesses without needed funding, more investors without meaningful investment opportunities, and greater uncertainty about whether crowdfunding as controlled by the SEC’s regulations will be viable. This uncertainty, more than anything else, is killer for small businesses.
Skeptics have accused the SEC of trying to kill crowdfunding to protect Wall Street. I think this is totally wrong. The SEC is working hard. They are already busy with their traditional scope of work and stretched thin in the face of possible budget cuts. But I wonder if the Commission could benefit from some leadership with new perspectives and experiences now that they are responsible for regulating crowdfunding in addition to the more traditional markets.
Lots of companies which are too small for IPOs could now find themselves regulated by the SEC if they pursue crowdfunding. Wouldn’t the SEC be well served by having a Commissioner who comes from the small business or growth startup sector, as opposed to the large company/Wall Street focus most previous Commissioners have had?
I think it would. Having at least one Commissioner with a previous focus on the small side of the American corporate eco-system to help inform the Commission about the realities and limitations of that market would help everyone involved. The Commission would have internal expertise in an area of the economy that has traditionally been outside the main scope of their activities, improving the SEC’s new regulation and enforcement efforts in that space. Likewise, small businesses would have, if not an advocate, at least someone who had been in the trenches and knew how small businesses operated, what is reasonable to expect, and how deadly uncertainty can be.
Post-JOBS act the SEC is responsible for companies of all different sizes- they should have leadership with experience to match. There are rumors of a couple of upcoming Commissioners vacancies; maybe one should go to the little guy.