Caution on N.J. ‘crowdfunding’: Editorial

Putting your money into an unproven start-up is a titanic risk. Even professional venture capitalists expect most of their big-money bets will fail. It’s risky business, but Washington is convinced that young, tech-savvy entrepreneurs are an engine for economic recovery, and it wants to help them raise start-up cash by knocking down regulations that protect investors from getting fleeced. That’s why Congress legalized “crowdfunding” in 2012, allowing inexperienced CEOs to raise money directly from an unsophisticated public. That law, the JOBS Act, is delayed while the Securities and Exchange Commission writes the rules. New Jersey doesn’t want to wait. Sens. Joe Kyrillos (R-Monmouth) and Ray Lesniak (D-Union) introduced a bill this week to bring crowdfunding to New Jersey, though limited to in-state transactions. What’s the rush? Lawmakers should hold off on this risky bit of deregulation while the SEC figures out how to keep amateur investors from taking a bath. State Sens. Joe Kyrillos (R-Monmouth) and Ray Lesniak (D-Union) have introduced a bill to create an intrastate crowdfunding system in New Jersey. The Jumpstart Our Business Startups (JOBS) Act, signed in 2012, gave the Securities Exchange Commission until the end of that year to create rules making crowdfunding legal on a national […]

Leave a Comment