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SEC Crowdfunding Rules May Be ‘Too Restrictive’: Acting Chair

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While 163 U.S. securities-based crowdfunding deals have been initiated and 33 completed their fundraising since the Securities and Exchange Commission’s Regulation Crowdfunding kicked in last May, acting SEC Chairman Michael Piwowar worries the agency’s final rules are “too restrictive.”

Piwowar ticked off those statistics Tuesday during a joint symposium at SEC headquarters in Washington, which was organized by the agency’s Division of Economic and Risk Analysis in partnership with New York University’s Salomon Center for the Study of Financial Institutions.

He noted that more than $10 million has been raised since the Reg CF rulemaking went into effect as part of the Jumpstart Our Business Startups (JOBS) Act, with most offerings “still ongoing.”

There are now 21 registered funding portals in the United States, Piwowar pointed out, which are Internet-based platforms through which all crowdfunding activities take place. Funding portals “facilitate the sale of crowdfunded securities, provide investors with information and communications channels, and take measures to reduce fraud,” he said.

“These aggregate numbers may seem small relative to the amount of capital raised in other private and public markets,” he added. “However, these represent the mere beginning of an entirely new funding channel. In fact, some of the results you will see today will highlight the fact that many of the entities engaging in crowdfunding may not have otherwise had access to capital.”

Piwowar went on to note that he looks forward to seeing “empirical studies of capital raising” under the crowdfunding rules, but that he has “concerns as to whether the final rules are too restrictive or too burdensome. Many of these restrictions are embedded in the statute itself.”

He said the commission should consider “whether any further steps should be taken to improve our crowdfunding regulations, including the use of exemptive authority” and that Congress may need to consider “whether any legislative changes to the law should be made.”

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