So What is Crowdfunding Anyway?
August 6, 2012
By: John A. Eckstein
FW Attorney John Eckstein who practices in the area of securities, was quoted in this article discussing crowdfunding and the JOBS Act.
“We are all assuming that the shares, once they have come to rest in the hands of an investor, will be 'restricted' stock which cannot be resold unless they are subsequently registered under the 1934 Act or exempt (e.g. Rule 144 or "Section 4(a)(1 1/2)" type transactions,” Eckstein said. “The SEC has a lot of regulation writing to do to make the rules for this new exemption clear and facile for the use by issuers, intermediaries, investors and service providers such as accountants and lawyers. Many things are yet to be determined.”
Eckstein said there is a political battle for the right to be the self-regulatory agency over portals.
“FINRA [Financial Industry Regulatory Authority] would certainly like the job, but there is at least one new portal trade association [Crowdfund Intermediary Regulatory Association] trying to form to do the job. My bet is on FINRA, which is also trying to get the job of regulating registered investment advisers after Dodd-Frank, but there are reasons why FINRA may not be the best public policy choice,” Eckstein said.