Thursday, October 24, 2013
The SEC has finally released its long-awaited proposal for rules to implement the crowdfunding exemption in the JOBS Act. It's available here. The 585-page proposal is substantial, even by SEC standards.
The statutory deadline for the SEC to adopt these rules was Dec. 31, 2012, but almost no one with a sophisticated knowledge of securities law, including me, expected the SEC to meet that deadline. I wish I had bet with some of the people in the crowdfunding community who naively expected that deadline to be met; I could have cleaned up.
There's a 90-day comment period. (Giving people 90 days to comment on a 585-page proposal that it took 18 months to draft is chutzpah.) Because of that, adoption before the end of this year is impossible. [I corrected this. The original post said 60 days.]
I am happy to report that SEC staff members have read my two articles on crowdfunding and the JOBS Act crowdfunding exemption (available here and here). Those articles are cited several times in the release. I will be interesting to see if the staff actually acted on any of my recommendations or accepted any of my interpretations in drafting the rule. But the JOBS Act itself puts significant restrictions on the content of the exemption, so it's not clear there's much they can do to cure some of the problems.
A few bloggers began chiming in shortly after the release of the proposal with summaries and instant analysis. The blogosphere is becoming like the race to the courthouse for shareholder litigation, often with similar quality. I will be offering some comments on the proposal, but only after I have had time to absorb and analyze it.