Crowdfunding Expert Kendall Almerico: 5 Ways Investors Are Protected in the New SEC JOBS Act Proposal

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Crowdfunding expert Kendall Almerico analyzed the 585-page SEC proposed rules and comments on equity crowdfunding under the JOBS Act released on October 23, 2013. JOBS Act expert Almerico says that the proposed rules, which are now open for public comment for the 90 days, contain good protection for investors.

JOBS Act Expert Kendall Almerico

JOBS Act Expert Kendall Almerico

While some of the proposed SEC rules are going to make equity crowdfunding not as user-friendly as we all would like, there is some good news for the smaller investor who never has a chance to invest in startups before.

Crowdfunding expert Kendall Almerico analyzed the 585-page SEC proposed rules and comments on equity crowdfunding under the JOBS Act released on October 23, 2013. JOBS Act expert Almerico says that the proposed rules, which are now open for public comment for the 90 days, contain good protection for investors.

"Opening a new line of investing like equity crowdfunding can create concerns for investors and regulators alike," Almerico says. "While some of the proposed SEC rules are going to make equity crowdfunding not as user-friendly as we all would like, there is some good news for the smaller investor who never has a chance to invest in startups before." Almerico says that if the proposed rules become law in 90 days, investors will have the following five things to look forward to:

1. Losses will be limited. "An investor who makes $100,000 annually or less will be limited each year to investing $2,000 or 5 percent of their annual income or net worth," Almerico notes. "That means small investors can get a piece of a hot new startup, but can’t lose their life savings if the investment goes bad."

2. Investors will have up to 48 hours before the offering closes to cancel their order. Almerico says that the SEC proposes that investors can cancel their order and get a full refund up to 48 hours before the end of the period of time where the money is being raised. "This gives investors a chance to back out if they are not financially able to continue or if they do not like the way things are progressing with the company they are investing in," Almerico explains.

3. The information you will get will allow you to make informed choices. "Despite what people were hoping for, the SEC has not streamlined the private placement information disclosure requirements much," Almerico says. "This is bad news for startups, but good news for smaller investors who will have a lot of important information at their fingertips about the investment before they have to write a check."

4. Small investors will have access to startups for the first time. Almerico notes that before the JOBS Act, only the wealthy or “accredited investors” had access to startup businesses. Now, regardless of income level, Almerico states that anyone will be allowed to invest in a startup, and do it through a website where information about the investment will be readily available.

5. Investors will not be drawn in by misleading ads. "If the SEC proposed rules become law, ads for startups raising funds under the JOBS Act will not bombard our Facebook and Twitter accounts with colorful ads and exciting videos that might conceal an otherwise weak business plan," Almerico says. "The SEC rules about how these offerings can be promoted are very strict, and generally limits ads to text and financial data."

About Kendall Almerico:
Kendall Almerico is a nationally recognized crowdfunding expert who has appeared in USA Today, Huffington Post, the New York Daily News, Business Insider, and hundreds of newspaper, blog, radio and television interviews. Almerico is also CEO of http://www.ClickStartMe.com, a crowdfunding site that provides individuals and businesses with an easy-to-use website to raise funds through online crowd funding. Almerico is also the founder of http://www.CrowdItForward.com, a charity-based crowd funding site that performs “Random Acts of Crowdfunding” and raises money for people in need through a 501(c)(3) charitable foundation.

Almerico is available for interviews and speaking engagements and may be reached by e-mailing media(at)clickstartme(dot)com or by calling 813.410.4658.

Source:
http://www.sec.gov/rules/proposed/2013/33-9470.pdf

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