SBE Council Member Neiss Testifies on Modernizing SEC Rules
SBE Council member and entrepreneur Sherwood "Woodie" Neiss brings his Crowd Fund Investing (CFI) framework to a congressional hearing today, where there is growing support to modernize outdated security laws that prevent small business owners from tapping into their networks for raising capital.
Today, the U.S. House Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs is hosting "Crowdfunding: Connecting Investors and Job Creators" where they will hear from Neiss and other witnesses on models for crowdfunding. The CFI model presented by Neiss, which includes strong investor protections, has been crafted in conjunction with SBE Council. President Obama included a crowdfunding proposal in his 2011 American Jobs Act based upon this model.
SBE Council President & CEO Karen Kerrigan argues that at a time when entrepreneurs and small businesses have limited sources for accessing capital, the nation needs to reform archaic rules that are hurting U.S. competitiveness, innovation and entrepreneurship. "We need to modernize and tweak outdated rules to allow Americans to invest in promising small businesses. Access to capital is becoming much more difficult and we need to identify and develop effective and modern ways for entrepreneurs to connect with potential funders," said Kerrigan.
(You can access the testimony of Mr. Neiss by clicking here.)
By revamping the Security and Exchange Commission's (SEC's) position on solicitation and accreditation, we can open the doors to capital for small business owners and entrepreneurs. Allowing for an exemption for Crowdfund Investing, which includes prudent protections for investors, will spur innovation, create jobs, and reinvigorate the economy.
As explained by Neiss in his testimony:
"Crowd Fund Investing (CFI) is not permitted by securities laws today but it stands to be a powerful method of financing, where groups of people will come together to invest in startups and provide valuable knowledge and experience to help an entrepreneur succeed. It will provide a way for unaccredited investors to pool their individual small contributions (likely between $50 and $500 each), and invest in companies and entrepreneurs they believe in. The funding rounds will occur on Internet platforms, which provide an added level of transparency and communication between the investors and the entrepreneurs. And 'Micro-Angel Investors' will support people and businesses they believe in and in turn, help to grow the economy."
SBE Council and Neiss (who is spearheading the "Startup Exemption" initiative) support creating common sense modifications to existing regulations to enable small businesses to raise capital. These reforms are modest, follow the spirit of the Securities Act of 1933 and the Exchange Act of 1934 and include:
Strong anti-fraud provisions
Limited risk and exposure for unaccredited investors
Transparency
Standards-based reporting and
Limit to the amount of seed capital a company can raise
"We are very excited that Congress and President Obama are seeking smart ways to help small business owners and entrepreneurs connect with potential funders. Technology and the Internet have leveled the playing field in so many other areas for entrepreneurs, and it only makes sense that they are allowed to tap into its power for needed capital," Kerrigan added.
SBE Council Staff Post
Showing posts with label SEC. Show all posts
Showing posts with label SEC. Show all posts
Thursday, September 15, 2011
Friday, September 09, 2011
Kerrigan Responds to President's Jobs Plan and Speech
SBE Council President & CEO Karen Kerrigan issued the following statement on President Obama's speech and the "American Jobs Act" that he outlined before a joint session of Congress last evening:
"We are pleased small business was featured prominently in the President's speech, and we look forward to reviewing the details of the American Jobs Act. Specifically, as it relates to the payroll tax cut for employers and various hiring credits aimed to boost hiring, we hope these provisions are not unduly complex or have conditions attached that may prevent small firms from fully utilizing these incentives.
"The extension of 100 percent business expensing through 2012 is a welcome move, however the short-term nature of this provision does not align with the longer-term approach that entrepreneurs take toward business planning. Short term extensions and incentives in general, especially during challenging economic periods, are less effective at stimulating investment.
"How these provisions and the other elements of the plan are paid for will also determine the proposal's overall impact on job creation and economic growth. If the plan is offset by tax increases on entrepreneurs, businesses or investors this will diminish the effectiveness of the President's plan. Sucking private capital out of a gasping, fragile economy is not a sound strategy for growth.
"Entrepreneurs we work with are happy to see the President supporting a proposal that SBE Council has been helping to advance through regulatory and legislative channels. The Administration has indicated it supports a 'crowdfunding' exemption from SEC registration requirements for firms raising less than $1 million. President Obama has also expressed interest in exploring Sarbanes-Oxley barriers that are preventing small firms from accessing the public markets, as well as raising the cap on mini-offerings from $5 million to $50 million. Entrepreneurs need access to growth capital, and modernizing SEC laws and regulations is imperative to helping small firms identify new sources of capital. (For more information about the crowdfunding exemption, you can review a recent media release on the issue by visiting: (http://www.sbecouncil.org/news/display.cfm?ID=4357)
"Unfortunately, the President did not broach the subject of fixing his health care law. The burdens and higher costs associated with ObamaCare are keeping small firms from hiring. The new law is driving health coverage costs higher for small businesses, and the unknowns relative to various provisions currently in the rulemaking or implementation stage continue to drive uncertainty. In addition, the President did not directly address the issue of new regulations in the pipeline and whether his Administration will take a more thoughtful approach to a system that is currently out of control. In fact, he seemed to defend the existing approach, which is a source of anxiety and concern for small business owners.
"I hope the President is open to ideas that will add value to his proposal. He needs to embrace a more collaborative approach with Congress - Republicans and Democrats alike - and consider their ideas to improve his plan. The President may get the 'jolt' desired if he includes legislative ideas that stem the tide of regulation, make permanent key tax provisions and fix the parts of the health care law that impose higher costs, taxes and new burdens on small businesses. Entrepreneurs and millions of Americans are hurting right now. This is a time for leadership, and we hope President Obama steps up to the challenge."
SBE Council Staff Post
"We are pleased small business was featured prominently in the President's speech, and we look forward to reviewing the details of the American Jobs Act. Specifically, as it relates to the payroll tax cut for employers and various hiring credits aimed to boost hiring, we hope these provisions are not unduly complex or have conditions attached that may prevent small firms from fully utilizing these incentives.
"The extension of 100 percent business expensing through 2012 is a welcome move, however the short-term nature of this provision does not align with the longer-term approach that entrepreneurs take toward business planning. Short term extensions and incentives in general, especially during challenging economic periods, are less effective at stimulating investment.
"How these provisions and the other elements of the plan are paid for will also determine the proposal's overall impact on job creation and economic growth. If the plan is offset by tax increases on entrepreneurs, businesses or investors this will diminish the effectiveness of the President's plan. Sucking private capital out of a gasping, fragile economy is not a sound strategy for growth.
"Entrepreneurs we work with are happy to see the President supporting a proposal that SBE Council has been helping to advance through regulatory and legislative channels. The Administration has indicated it supports a 'crowdfunding' exemption from SEC registration requirements for firms raising less than $1 million. President Obama has also expressed interest in exploring Sarbanes-Oxley barriers that are preventing small firms from accessing the public markets, as well as raising the cap on mini-offerings from $5 million to $50 million. Entrepreneurs need access to growth capital, and modernizing SEC laws and regulations is imperative to helping small firms identify new sources of capital. (For more information about the crowdfunding exemption, you can review a recent media release on the issue by visiting: (http://www.sbecouncil.org/news/display.cfm?ID=4357)
"Unfortunately, the President did not broach the subject of fixing his health care law. The burdens and higher costs associated with ObamaCare are keeping small firms from hiring. The new law is driving health coverage costs higher for small businesses, and the unknowns relative to various provisions currently in the rulemaking or implementation stage continue to drive uncertainty. In addition, the President did not directly address the issue of new regulations in the pipeline and whether his Administration will take a more thoughtful approach to a system that is currently out of control. In fact, he seemed to defend the existing approach, which is a source of anxiety and concern for small business owners.
"I hope the President is open to ideas that will add value to his proposal. He needs to embrace a more collaborative approach with Congress - Republicans and Democrats alike - and consider their ideas to improve his plan. The President may get the 'jolt' desired if he includes legislative ideas that stem the tide of regulation, make permanent key tax provisions and fix the parts of the health care law that impose higher costs, taxes and new burdens on small businesses. Entrepreneurs and millions of Americans are hurting right now. This is a time for leadership, and we hope President Obama steps up to the challenge."
SBE Council Staff Post
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