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Tread carefully on equity crowdfunding

State bill has both advantages and pitfalls To cut down on fraud during the Great Depression, Washington banned private companies from soliciting investments from the general public. Since then, only relatively wealthy people — those who qualify as “accredited investors” by virtue of income or assets — have been able to buy shares of companies not listed on a public stock exchange. The passage in early 2012 of the federal JOBS Act — short for Jumpstart Our Business Startups — was intended to change that. Among other things, the JOBS Act embraced “crowdfunding” as a way for privately held companies, usually start-ups, to raise money from ordinary investors through online fundraising campaigns. More than 16 months after President Barack Obama signed the JOBS Act, the federal Securities and Exchange Commission is still writing the rules of the game. The reasons for the delay are more complex than a federal agency stiff-arming the president and Congress. Crowdfunding in the Internet era has largely been a province of artists, causes and special projects that don’t come with an expectation of profit. You might get an awesome T-shirt or a front-row ticket out of your crowdfunding investment, as well as some warm feelings […]

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