She says the new rules will help some small companies gain access to capital. But she sees the risks as unacceptably high and the protections as too weak.
“We are dismantling our public markets in favor of these loosely regulated private markets,” Roper says.
Judd Hollas, CEO of EquityNet, an online investment platform, disagrees. He says the new market that will be created will match more investors with small companies.
“It will increase the size of our market, at least on the investor side, on the order of 10 [times], so you’re talking nearly a thousand percent increase,” he says.
Hollas adds his site has tools that will help that new flood of investors gauge the risks of each investment.
Rory Eakin is founder and chief operating officer of CircleUp, another online investment platform. He sees a downside for companies in the new rules; namely, that they would require costly audits and a great deal of public disclosure about the company’s risks and business plan.
“I think many companies would be concerned about that level of disclosure and the potential expense involved in raising capital that way,” Eakin says.
Eakin says he fears the best companies won’t want to disclose their proprietary information and will therefore forego equity crowdfunding for the more traditional fundraising methods.
The SEC is in a 90-day public comment period on the proposed rules. After that, the commission will review the comments and determine whether to adopt them.
Article Appeared @http://www.npr.org/2013/11/26/247170871/small-firms-may-soon-turn-to-crowdfunding-to-sell-shares