November 17, 2010
Elizabeth M. Murphy, Secretary
U.S. Securities and Exchange Commission
100 F Street NE
Washington, D.C. 20549
Re: Support for SEC Rulemaking Petition File No. 4-605
Dear Ms. Murphy,
I am writing in support of SEC Rulemaking Petition File No. 4-605, of the "Crowdfunding Exemption." The new rule would provide an important option for small and micro-business to obtain funding for their ventures without onerous filing and legal fees and without generating debt. Simultaneously, the rule allows community members a new opportunity to support small businesses in their neighborhoods or areas of interest.
As proposed, the rule protects investors by limiting individual investments to $100, limiting the total to $100,000 and providing disclosure requirements by the offerer to the investor. The low maximum investment limits the investors risk, which is inherent in any financial dealing. Furthermore, investments of this size and scope are likely to be sourced in the very community that the offerer wishes to create their project - whether this is a community of family, friends, or neighbors; online or off. Community investment forms a solid structure for neighborhoods, towns and cities to revitalize, reconnect and create sustainable economies.
The potential for fraud, while never eliminated, is minimized by the requirement that the offerer be an individual and by the nature of crowdfunding, which is most often within a group or community that can investigate background with little effort and track tangible results. Additional protective or fraud-preventative steps could be incorporated by the SEC. Of course, any additional safeguard should remain no or low-cost and require minimal paperwork since the major obstacle the proposed rule seeks to avoid is the significant fees and filing requirements of the current SEC framework.
The rule is in keeping with the purposes of the Securities and Exchange Act and is precisely the type of policy innovation that is called for in the current economic climate. Providing a new way small business to thrive is central to our economy's recovery and sustained health.
I strongly urge the SEC to enact Rulemaking Petition File No. 4-605.
Thank you for the opportunity to comment,
Kyle Wiswall, esq.