April 15, 2013
From: Matt Morse, CrowdLever CEO
In re: Crowdfunding regulation of the JOBS Act
Date: April 15th, 2013
To add to the dialog surrounding the subject of investor protection and education, I have the following comments to add.
I propose that the SEC create a standardized disclosure document that all crowdfunding sites could use, and would be required to use, when raising funds. At the same time potential crowdfunding investors could be required to acknowledge or indicate that they had learned, understood or at least signed off on some basic principles of investing in start ups. The link between the two documents would be that all of the acknowledgments, testing or learning would be in parallel to the most important points that the SEC wants to promulgate.
A simple template outline would be like the following:
Corporate Bankruptcy (possible)
Length of Investment (unknown)
The benefits of a diversified investment portfolio (good)
The track record of VCs and Hedge fund managers for similar investments (poor)
A prudent portion of savings that might be invested in a start up (very little)
In these dual documents, one or two explanatory sentences would be offered for each subject, educating, and being acknowledged by the potential investor such that every potential investor would be aware that any and all sectors of capitalism offer the chance to both make and lose money and involve risk whether they be coffee shops, software start ups, Wall Street brokerages or even 100 year old auto manufacturers.