Subject: File No. S7-09-13
From: Rosemary Meling

October 30, 2013

I strongly object to the SEC getting involved in regulating the phenomenon known as "crowdfunding."  The whole point of crowdfunding is to by-pass the banks and venture capitalists who won't fund a business idea because they only look for so-called "safe" investments that follow conventional wisdom.  Well, sometimes conventional wisdom is wrong.  I speak from experience -it's tough to get a loan to start a pick-your-own garden patch if the conventional method of farming is corn and soybeans. Yet pick-your-own businesses have thrived. 
Certainly it is possible that someone will try to scam funders and I'm always okay with filing suit for fraud when necessary BUT I don't see the point of a whole new set of rules and regulations when fraud is the only problem. Fraud is already illegal. As for regulating the websites, the marketplace will weed out sites that engage in or fail to deal with fraud - word travels - but regulation will only hamper and stifle innovation.  

I have taken part in crowdfunding at and with modest donations for projects with which I am sympathetic or which I'd like to see succeed.  I am not stupid and neither are most people; we know it may be a longshot but we are there because we believe in the product or the principle of helping the underdog. A couple of projects I funded got off the ground and we will see how they do.  I wish them well.  I got my little bit of product or satisfaction from them, it was as advertised, and that is what I expected.  I have invested in a couple that are still in progress - computer games - and my kids have gotten access to the betas.  I hope the company succeeds because I like what they are trying to do and I believe in encouraging economic and industry diversity.  

I happen to think it is a shame that the entrepreneurs can't offer shares of their company but I realize it is because the SEC has already squeezed the little guy out there so I am content with a copy of a game or a box of jelly beans. 

Leave the little guys alone.  Don't set amounts, don't register portals, don't set time limits, don't require fees, and DON'T tell individuals how much they can invest of their own money.  You'll just break the system - which has sprung up because for the small investor or entrepreneur the other system you DO regulate IS broken.  They can't participate.  This is economics at its most basic level and it has worked for centuries. The minute the SEC starts adding fees, limits, professionals, and paperwork, money is going to be wasted and people are going to be prosecuted as criminals for no genuine wrong-doing.  We have enough of that going on already.    

You cannot keep investors safe.  It isn't the nature of investment to be safe.  It isn't government's job to protect people from their own choices.  Government is not a parent, but it is more interfering than any parent I have ever met and prevents much good, much innovation, and much success by placing obstacles in the way of ordinary people. 

All you have to do is prosecute fraud.  That's it.