The Crowdfund Intermediary Regulatory Advocates -- the leading advocacy group for the crowdfunding industry (CFIRA) -- proposed an initial blueprint to the Security and Exchange Commission this week to ensure a secure and effective crowdfunding program under the JOBS Act. President Obama signed into law the Jumpstart Our Business Startups Act (JOBS Act) on April 5, 2012. The Act directs the SEC to develop rules within 270 day to enable small businesses to raise funding through crowdfunding portals.
"We believe the success of crowdfunding will be dependent upon recognition of the power, influence and opportunity afforded to entrepreneurs by new media technology and the creation of a comprehensive regulatory framework which protects investors from potential harm," Candace Klein and Vincent Molinari, CFIRA's co-chairs, urged in a letter to the SEC.
CFIRA's letter included a summary of proposals to comply with the JOBS Act's requirement on matters such as reducing the risk of fraud. CFIRA proposals included:
CFIRA suggested that any form of equity or debentures security, as well as those convertible or exchangeable for other securities, may be sold under the crowdfunding initiative.
"We week to work with the Staff to develop a system which includes transparency, ‘crowd intelligence” and common sense oversight enacted in such a s manner that preserves the integrity and scalability of interest-based platforms envisioned by the act," Klein and Molinari assured the SEC.
CFIRA Comment Letter to SEC 5.22.12 Final
CFIRA is an organization formed by the crowdfunding industry’s leading platforms and experts. The group will work with the Securities & Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and other affected governmental and quasi-governmental entities to help establish industry standards and best practices. For more information, visit www.CFIRA.org.