February 1, 2013
In re: public comments for Crowdfunding/JOBS act
From: CrowdLever, Matt Morse
Date: February 1st, 2013
Thank you for this opportunity to post public comments concerning implementation of the JOBS Act of 2012. Many individuals and companies have posted on various portions of the new law. I would like to add to the public commentary on the following subjects.
Escrow Accounts: Consider having funding mechanisms/groups/portals set up dedicated one-time escrow accounts as a holding account for funds gathered. Funds would be deposited directly into the account and not released until a specific set of conditions had been met. For example, all funds had been gathered and fund raising was completed, and/or the funds were available to be paid directly to the vendor/landlord/service for which the funds were raised and intended to be used. By doing this, investors would have some assurance that raised funds were going where the fundraiser had claimed that they needed to go for some specific business purpose, as claimed in the offering.
The conditions of the fund release would be identified by the offeror before monies were raised and would give some credible guidance to potential investors about what the money was to be used for.
Quarterly accounting review: Consider requiring the recipients of the investment funds to account to investors on a quarterly basis as to what the money was used for. By using a third party independent source such as an accounting firm with professional credentials, investors would have some indication of what the invested money was being used for in real time. Third party, independent verification would also heighten the awareness and accountability of the investment recipients since they would have to show some accounting of what they had used the money for in the prior quarter.
Cooling off period: Consider a cooling off period of, for example, 21 days from when an investor deposited funds and the funds were released to the offeror. This simple waiting period could give some investors a chance to back out of an otherwise reasonable opportunity without leaving them in a situation later where they would have to make a fuss solely because they had buyers regret about their investment. Some would-be savvy investors are not as patient or confident as they might think that they are once some time has passed. Panicking earlier is better than panicking later once the cement has dried.
Finally, please consider fast tracking your implementation and promulgation of the JOBS Act. As you know the meter is running now past your 270-day period and many investors and companies are poised to contribute to the US economy as soon as your job is completed.