WASHINGTON, D.C. – Today, the U.S. Securities and Exchange Commission (SEC) finalized crowdfunding rules to allow startups and small businesses to raise funds from small-dollar investors. Oregon’s Senator Jeff Merkley authored the provision of the JOBS Act to legalize crowdfunding, and has been repeatedly pressing the SEC to finalize the rules so that the marketplace can open.
“It’s good news that the crowdfunding marketplace will finally be open for business,” Merkley said. “I’m also pleased that the SEC has strengthened investor protections from its previous proposal. I encourage the commissioners to continue to monitor the implementation of crowdfunding and adjust investor protections as necessary.
“We should be harnessing the power of the Internet so that Americans can invest in an innovative start-up or a favorite small business in their own communities. Oregon has led the way on crowdfunding, but there is no good reason for this concept to be limited by state lines. Putting a national crowdfunding framework into action is a positive step forward for small businesses and for American innovation.”
Unlike current crowdfunding platforms like Kickstarter or GoFundMe, the new crowdfunding framework will allow Americans to own a piece of the businesses they contribute toward. That means that if the business does well, they will receive a return on their investment. That also means that if it does not well, shareholders might not get some or all of their money back.
Because of the risks associated with equity investing, Merkley pressed hard for strong protections for mom-and-pop investors to protect against the risk of fraud. The rules announced today include protections such as limits on how much small investors can put into any given investment opportunity and responsibility of the crowdfunding platforms to make sure the companies are who they say they are.
“We watch movies online and bank online and buy plane tickets online,” Merkley continued. “Now, small businesses and entrepreneurs can finally finance their growth online.”