Petition posted by SEC as File No. 4-605!

Great news: the SEC has posted the petition to their website, as File No. 4-605.  See http://www.sec.gov/rules/petitions.shtml to see it listed, and http://www.sec.gov/rules/petitions/2010/petn4-605.pdf for the petition itself.

So now it’s time to spread the word and get those comments in!  Here’s how to submit comments, which should appear on the SEC’s website within a few business days:

1. Email the SEC at: rule-comments@sec.gov
2. In the subject line write “Re: File # 4-605”
3. In the body of the email write “These are comments in regards to a petition for rulemaking change.”

If you look at the SEC’s “How to Submit Comments” page (http://www.sec.gov/rules/submitcomments.htm), disregard the references there referring to an online form, or file numbers beginning with “S7-” or “SR-” — these are for proposals issued by the SEC, not public petitions like ours.

(Thanks to Mitch Silverman and Seth Elliott for clarifying these instructions!)

If you like, you can also CC (or BCC) the message to comments at crowdfundinglaw dot com — this is just for me to archive what’s been sent, to see if anything isn’t making it onto the SEC site.

Explain in your own words what you think of the idea and what your personal interest in it is. Fine with me whether you’re for it, against it, or somewhere in between– the main thing is just to encourage the SEC to consider this issue and open a dialog. Note that if you cut and paste, they will designate your letter as an example of a “Type” (e.g. http://www.sec.gov/comments/4-547/4547typea.htm) rather than an original contribution, which presumably carries less weight. I don’t think burdening the SEC with copy-pasted activist spam will make any friends there or help the cause.

Here’s a post I wrote for boingboing on Friday, which gives the instructions above, along with some background: http://www.boingboing.net/2010/07/03/sec-crowdfunding-exe.html

Since that boingboing post, scores of people have tweeted this campaign, which certainly helps to raise awareness– but meanwhile only two have actually emailed comments to the SEC.  I find this disparity in numbers amusing.  But anyway, see http://www.sec.gov/comments/4-605/4-605.shtml — and thanks to Mordicai Knode and Ben Schwartz for the good points and good discussion!

Petition-listing-screenshot

UPDATE (Aug 2012)

I’m updating old blog entries to include relevant external documents listed by date. Here’s the one mentioned above:

3 Jul 2010
SEC Crowdfunding Exemption action: File No. 4-605” by Paul Spinrad, Boing Boing

I wrote this to announce that the SELC proposal had been posted on the SEC site and was open for comments, hint, hint.  I assume that the first few commenters logged on the SEC’s comments page were Boing Boing readers — I don’t know them. (But many of the later commenters on the SEC site are pals of mine whom I bugged to write in.)

Sec-crowdfunding-exemption-action-3jul10_

5 thoughts on “Petition posted by SEC as File No. 4-605!”

  1. A few problems here1) You’ll need hundreds of investors, which makes you subject to Sarbox.2) You can’t raise enough money under this scheme to afford Sarbox.3) The cost of administering many tiny shareholders is extreme, both in money and time.What really needs to be done is1) *Reduce*, not increase, the qualifications for accredited investor2) Permit public advertising of private offerings3) *Increase* the number of shareholders required to presumptively make you a public company subject to Form 8 disclosures and Sarbox from its current 500 to something more like 1500-2000.4) Make the fundraising limits under Reg D 505/505 higher, and then inflation index them.The only purpose of the current restrictions is to keep private offerings from competing with Wall Street. Wall Street should not occupy such a privileged position. Also, it’s a lie that offerings made by series 7 licensees are "better" or "more likely to be honest" than private offerings, though that is what the SEC intends you to believe.

  2. I totally support your petition but think that it should not include a cap of $100,000 on the total offering since the exemption is already possible under Rule 504 of Reg D by setting up a company and offering a maximum of $1M within 12 months.I think this is very new to consider only the cap on the investment per individual as the way to guarantee protection for all categories of investors. Furthermore, allowing this has become possible because of the technological possibilities offered today and necessary in response to the desire of large groups to mutualize financial means in order to fund projects or common causes.

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