January 15, 2014
I can understand that the SEC feels pressure to approach crowdsourcing as an extension of brokers and thus seeking to create " brokerage type" regulations on intermediaries - specifically funding portals.
I would like to ask the SEC to consider approaching crowdsourcing as an extension of "family and friends fundraising". After all, the Internet has changed the typical American's concept of family and friends. Through X-Box Live and Facebook, Americans meet and befriend and develop trust with a broad spectrum of others. We share ideas and beliefs. We develop trust and coordinate to build new products, coordinate to develop new ideas and work together to create new markets.
Crowdsourcing is an extension of these developments - the development of Internet based communities - of Internet based networks that share ideas and share the benefits and risks related to those ideas.
The SEC should focus on coordinating with other Federal Agencies to develop tools to protect investors, for example, rather than burden the "intermediary" with qualifying an investor, it is possible to adapt capital gains tax rules that limit benefits and limit loss recovery for investors who invest outside of their qualifications.
The Internet has its own tools for developing and verifying trust - thru comments and ratings by individuals. We also have access to more information than we ever had before. Crowdsourcing will also create new markets for information that consumers can use, and your proposed regulations will interfe that this natural evolution
The proposed rules if not modified will spoil crowdsourcing. It will demote crowdsourcing into a new type of "penny stock" and create incentives for new types of "boiler room" scams where innocent people are canvased into investing in something they do not understand. Your rules, as proposed, will insert more people between the scientist or inventor with a great idea and the Internet friends and family who want to support that idea.
Please consider reducing the proposed regulations. Please consider allowing crowdsourcing to evolve further. The concept and technology behind it is too young for the regulations that you are proposing.