The White House and Congress made much fanfare of passing a bill into law, the JOBS Act (Jumpstart Our Business Startups Act), in March 2012, pointing out it would allow for "equity crowdfunding," or the ability for budding entrepreneurs to take to the Web and solicit money from backers in exchange for stock in a new venture.
But the Securities and Exchange Commission is in charge of writing the rules that would govern such equity crowdfunding, and after opening proposed rules up for public comment, now appears likely to blow its own deadline for releasing such rules before the end of the year, the New York Times reported Thursday. Specifically, the SEC appears to be struggling with court-ordered reviews of its new regulations. As the Times explains:
A spokeswoman for Senator Jeff Merkley, an Oregon Democrat who largely wrote the crowdfunding measure, said that the S.E.C. was grappling with the more stringent requirements courts had imposed for conducting cost-benefit analyses when writing regulations. This “has slowed down everything from Dodd-Frank to the Jobs Act,” the spokeswoman, Courtney Warner Crowell, said in an e-mail.
A previously announced leadership shuffle at the SEC is also likely to hamper the process. Prior to the JOBS Act, U.S. companies were legally prohibited from seeking broad public investment prior to going public and filing extensive financial documentation with the government. The JOBS Act seeks to carve out an exception for crowdfunding online through social portals modeled after the popular website Kickstarter (which has said it will never get into the game of equity crowdfunding).