http://thehill.com/blogs/floor-action/house/191669-bills-easing-sec-rules-advance-in-house

H.R. 2940, which would allow small startup companies to solicit investors for startup capital.

H.R. 2930, which would allow companies to obtain capital in amounts less than $1 million through small investors — known as “crowdfunding” — without registering with the SEC.

Debate and consideration of amendments could take place late Thursday or Friday.

...not sure whether that $1 million in crowdfunding would still be allowed after already getting more from bigger investors.

But is registering with the SEC such a big deal. At least the countries i have lived in, registering with the equivalent body was no big deal. The accounting burden was minimal as well.

To me the key isn’t SEC registration, it’s being able to take investments from people who aren’t “accredited investors” (ie., millionaires). That way I could invest, if FF chose to go that way.

Very cool!  Thanks for the info!

dennisp - 04 November 2011 09:35 AM

To me the key isn’t SEC registration, it’s being able to take investments from people who aren’t “accredited investors” (ie., millionaires). That way I could invest, if FF chose to go that way.

LPP would, I’m sure, go that way.

Awesome. It’s passed the House:
http://www.govtrack.us/congress/bill.xpd?bill=h112-2930

Might be a good idea for people to contact their senators.

I read the bill, it’s a little hard to tell its full effect because it’s written as changes to existing law, so really you have to look up the law as well to get the context. But I didn’t see anything about previous investments. The limit is up to $2 million if you provide audited financial statements. Those are annual limits. Individual investors are limited to $10,000 or 10% of their annual income, whichever is less.

Is that an American thing? Cus i am allowed to invest in anything i want. Really. Also i can form a company or whatever and take investment from whoever is willing to provide it. Why they hell would there be anything to stop you? About the only limit is that some won’t want small investors. Only larger ones. But that is not the same as not permitted.

Yep, it’s an American law. I can’t invest in most startups unless I’m an accredited investor, which means either I have net worth over a million dollars or income over $200,000/year. That’s why on the LPP investors page it says it’s seeking “foreign and accredited US investors.”
http://www.lawrencevilleplasmaphysics.com/index.php?option=com_content&view=article&id=94&Itemid=116

There are a lot of things that Americans can’t do which are perfectly fine in other countries.

Wow, just Wow. In the land of the free you can’t invest your money on what you want? That is really freaky.

delt0r - 05 November 2011 10:39 AM

Wow, just Wow. In the land of the free you can’t invest your money on what you want? That is really freaky.

Normally, a company that wants to sell any securities whatsoever must adhere to strict registration and reporting requirements enforced by the SEC.

It’s a safety reform from the Great Depression of the 1930’s. Care to guess what the crash of 2008 would have been like without it? I’m sure Randites will spin a glorious tale of the triumph of th unfettered free market… they’re good at that

Anyways, a company that wants to avoid full registration and reporting can do so under certain exemptions specified in the laws.

One way to avoid those requirements is for a company to decide to limit the amount of what is sold and limit whom it can be sold to.

It is natural for a company such as LPP to seek such an exemption at this stage of its existence… but in return for not registering they must show that they aren’t trying to scam mom and pop out of their savings.

The “accredited investor” provision is part of such exemptions to the law.

It is good that crowd-sourcing is being considered but the current law and its exemptions serve as needed regulation.

The rest of the world seems to be doing just fine without it. I mean as long as a company is properly registered etc that is. This is not hard to do and there are minimal legal requirements with both investors and the SEC equivalent. You can invest at any level. Its “regulated” in that there are laws to comply with, but anyone can invest into any company if they will take the investment.

The idea that i can only invest if i am rich enough is ridiculous.

Yes, it does seem more paternalistic than protective.  Also, you can rack up massive unsecured credit card debt in this country, odd that you can only do that on shoes but not on investment. 

More about the movement:  http://www.startupexemption.com/

Help fund them on IndieGoGo : )

The bill in question does allow a higher limit when companies supply audited financial statements.

And it wasn’t exactly the small startup companies that crashed the economy and wiped out investors in 2008. The bill makes no changes to regulations of large companies or financial institutions.

dennisp - 05 November 2011 02:20 PM

The bill in question does allow a higher limit when companies supply audited financial statements.

And it wasn’t exactly the small startup companies that crashed the economy and wiped out investors in 2008. The bill makes no changes to regulations of large companies or financial institutions.

If the bills are successful then I would be very happy to invest in LPP, but if anyone thinks that any new securities law will not be abused then they haven’t been paying attention.

As I said: it is good that legalizing alternatives such as crowdfunding is being considered… but that doesn’t change the fact that current securities laws were written to serve a much-needed purpose.

And aside from the rather panglossian cheerleading on startupexemption.com the reasons for the existence of those laws still apply. The securities markets of the 1920’s would be as much of a disaster today as they were in 1929. The current misbehavior of less-than-upright companies that is documented daily in investor forums worldwide can leave no doubt of that.

People lie and in the financial world if something can be misused then it will be misused… and thus regulation.