July 18, 2012
It was mentioned by one of your employees at the meeting on Friday that bankruptcies might be used in rule making, perhaps to preclude participation for some period of time. It wasn't clear if it meant business or personal bankrtupcies, or preclusion as a platform, or as an investor or as an issuer. I feel that this, unless it only means for a corporate bankruptcy, or for an issuer looking to raise money to stop bankrutpcy, would be an unfair and discriminatory rule if it were put in place. In the past seven years, mostly women and minorities filed for personal bankruptcy - most innocent victims of the mortgage scandal for which no one went to prison (or few did), and the AIG debacle that followed.
One of the things that crowdfunding offers to women and minorities it the access to capital and the ability to participate equally as a platform owner with those who aren't women or minorities. Does it make more sense to preclude these unfortunate people for having had good credit that they lost through forces beyond their control, but to allow a 22 year old with no credit to partcipate?
I understand a company that has gone through a bankruptcy recently not being allowed to participate in crowdfunding to try to raise money, or to become a platform during that time. But I hope that you don't mean to keep those who have had personal credit issues out as well (those being mostly women and minorities). If so, if I might suggest not using the same time periods that are keeping our economy stagnant right now. Namely. if precluded from investing or beign a platform, let it be only for a year or two after the finalization of the filing for personal bankrtupcy. As it is 2012 now, it would preclude anyone who was hurt by others misdeeds (home loans, unscrupulous realtors, AIG) from being hurt again - namely and mostly women and minorities. I think to keep any exlusionary rule at the levels set today in the market (5 to ten years) it would only serve to further dampen the economy and further disparate the financial position of women and minorities and those who are not, and continue to deny them access to capital.
Again, I can see business bankruptcies, and not being able to crowdfund to prevent bankruptcies, but I look for clarification on the intent to use bankruptcy as any other sort of filtering factor.
I look forward to clarification on the potential for applications of bankrutpcies to the preclusion of platforms, investors or issuers. I hope that you'll keep the continued plight of women and minorities in mind when making the rules.