The top Corporation Finance Division post will be crucial because of the unit’s role in writing rules that govern public and private capital-raising.

In an interview, Mr. Hinman said “spurring more public offerings is a worthy goal of regulators, because investors benefit from the detailed public disclosures.” Hinman has also voiced his view towards further expanding the 2012 Jumpstart Our Business Startups Act. The law, also known as the JOBS Act, passed with bipartisan support and was hailed as the first sign that Washington understood how the internet could be used to help smaller companies raise money without turning to Wall Street.

“To the extent the SEC can make it more attractive and efficient to raise capital here, we are going to want to do that,” he said. “That is our primary focus and challenge going forward.”

Companies raised $2.1 trillion in private placements of stocks and bonds in 2014, compared with about $1.35 trillion for public sales of equity and debt, according to SEC figures. The decline in U.S. public listings has happened as fast-growing startups such as Uber Technologies Inc. and other “unicorns” have been able to get the cash they need from venture capitalists.

However much deal makers have lauded the SEC’s new-found resolve to promote public offerings, some market participants say they don’t see the problem that Mr. Clayton has said he wants to solve. “The real question is do small-growth companies have access to capital, and they do,” according to Robin Graham, managing director and head of technology, media and communications at Oppenheimer & Co. Inc. “It’s just in the private markets.”

According to Samuel Goldberg, a senior partner at Prospectus.com, a firm that specializes in business plan writing, feasibility studies and the preparation of investor offering documents and guiding private companies throughout the course of both private placements and public capital raising initiatives, “Public markets are ultimately the holy grail for start-up companies; easing the complexities of public listing can prove helpful for those who have private investors seeking exit strategies and enabling share Issuers to attract a new and much broader universe of investors.”

US SEC Brings in Top Gun Lawyer to Promote IPOs, Expand JOBS Act

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When it comes to preparing for today’s “May Day for Crowdfunding”, few have worked harder than the founders of legal document service provider iDisclose.com, which is led by co-founder and CEO Georgia Quinn, a glass-wall breaking securities attorney who has become a leading expert in the domain of documentation for private securities offerings and equity crowdfunding. Adding further credibility to Ms. Quinn’s stature within the space, she is Of Counsel to New York-based business and securities law firm Ellenoff Grossman & Schole LLP. That firm’s ‘name partner’, Douglass Ellenoff, Jr is also the co-founder of iDisclose.com.

While a steadily-increasing number of regulators in Europe and other regions have already embraced equity crowdfunding (led by the U.K. based on number of platforms and deal offerings), it has taken several years since the passage of the JOBS Act in  the United States for regulators to actually establish the proper goal posts for this playing field. This several-years-in-the-making planning stage, during which the U.S. Securities and Exchange Commission has been fine-tuning the regulatory regime in which private placement offerings can be ‘advertised and promoted’ to individual investors without the friction long-associated with private offerings available only to institutional and ultra high net worth investors has included the creation of a cottage industry of service providers.  Now that the advance planning for a piece of the equity crowdfunding pie has run its course and Monday May 16 is when the curtain will launch, it’s now “Ready, Fire, Aim” time. Or, to hijack another adage, “Let The Games Begin!” With that, few service providers have worked harder or longer in gearing up for “May Day for Crowdfunding” than iDisclose.com.

To read the entire story from RaiseMoney.com, click here

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As reported first by Law360, the budget boost for SEC and the CFTC envisions more auditors, more investigators, more enforcement staff. That said, according to one industry source who spoke off the record with BrokerDealer.com, “The SEC vision of using the increased budget to add 127 new staffers to Office of Compliance Inspections and Examinations is illustrative of the agency’s dedication to making their bureaucracy more bureaucratic, and even less efficient than it already is. Sounds like just more bodies tripping over their own shoes and tying up industry members with paper clips.”

Law360, New York (February 9, 2016, 11:14 PM ET) — A pair of Wall Street regulators on Tuesday laid out their wish lists for how to spend their budget bumps that President Barack Obama floated for fiscal year 2017, with eyes on ramping up enforcement and examination staffs to meet the demands of the Dodd-Frank Act and growing complexity of the markets.

Under Obama’s plan, the U.S. Securities and Exchange Commission would see its budget expand to $1.8 billion, an 11 percent increase, for the next fiscal year starting Sept. 30 while the U.S. Commodity Futures Trading Commission would grow to $330 million, a 32 percent bump. His economic adviser, Jeffrey Zients, said on Monday this amounted a “down payment” toward a long-range goal of doubling both agencies’ budgets by 2021.

In separate budget requests, both the SEC and the CFTC said they want to vastly expand their headcount and ramp up their spending on information technology to deal with emerging gaps and nagging shortcomings in their oversight.

“The SEC appreciates the confidence that Congress and the President have placed in it in recent appropriation cycles,
with enacted budgets that are permitting the SEC to begin to address longstanding resource challenges,” officials at the agency wrote. “In light of the continuing growth in the industry and the enormity of the responsibilities now placed on the agency, however, additional funding is critical,” they added.

Nonetheless, the SEC said it would take that money to add about 250 full- and part-time staffers, bringing its budgeted headcount up to just under 5,200 budgeted positions. The vast majority of these new positions, or 127, would be earmarked for the agency’s Office of Compliance Inspections and Examinations, where they would focus primarily on conducting investment adviser examinations.

For years, the SEC has struggled to examine more than 10 percent of the nearly 12,000 registered investment advisers under its watch, and about 40 percent of such firms have never been examined. Even with the proposed increase in examiner headcount coming out of the fiscal 2017 budget, however, the agency would only get to about 12 percent of registere advisers in a given year, the SEC noted.

The agency also would like to ramp up enforcement, adding 52 positions to the division. A dozen of those positions would reinforce its litigation efforts, the SEC told Congress.

“This increased allocation will enable the SEC to litigate any case where it believes admissions of wrongdoing are appropriate under its new policy, if necessary,” SEC officials wrote.

Other units would see more modest gains in headcount. The Division of Corporation Finance would look to gain four more budgeted positions as it expects to contend with an increase in request for guidance from small businesses and investors around the new rules passed out of the Jumpstart Our Business Startups Act aka JOBS Act such as equity crowdfunding and the so-called Regulation A+.

Over at the CFTC, Chairman Tiimothy Massad said he would use the additional $80 million that the president wants to give his agency to hire 183 full-equivalent staff across its divisions.

“This increase is necessary because the commission has not received budgetary increases sufficient enough to allow full implementation of its responsibilities,” Massad wrote to Congress.

More than a third of the proposed increase would go to bolstering the agency’s information technology infrastructure, Massad said. Within that total is the CFTC’s market surveillance function, which Massad wants to grow to 160 full-time positions, up from the current tally of 104 such positions. Such an increase would help support the agency’s development of automated surveillance and data visualization tools and ramp up its oversight of the uncleared swaps market, among other things.

Beyond that, the enforcement division, which netted the government $2.8 billion in fines during its fiscal 2015, would be a big winner under the CFTC’s proposal. It would add 51 full-time equivalent positions to the 161 such staffers budgeted for the current fiscal year.

“The commission not only has insufficient resources currently, it anticipates more time-intensive and inherently complex investigations due to innovative products and practices within the industry, including the use of automated and high frequency trading,” CFTC officials said.
To read the full story from Law360, click here

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The total number of Financial Industry Regulatory Authority (FINRA) member retail brokerages has been on the decline for the last five years, but one sliver of the universe is showing new signs of life: A new crop of broker/dealers and online funding portals are joining FINRA to capitalize on new opportunities made possible by the JOBS Act of 2012. The legislation prompted the SEC to make it easier to market and solicit investments, and opened the door for small businesses to engage in so-called “equity crowdfunding.”

About 15 to 20 of these new firms have signed on since 2013, according to Fishbowl Strategies, with another three to six launching soon, in anticipation of a wave of issuers and investors entering the market. Whether there is a crowd for equity crowdfunding remains to be seen.

But Paul Boyd, managing partner at ClearPath Capital Partners, a wealth management firm for tech entrepreneurs, says there
is plenty of pent-up demand and a backlog of Reg D deals that are moving forward.

Boyd also expects the next phase of the JOBS Act, Title III, will bring a lot more attention to capital raises online. Set to go into effect in May, those rules let any investor, accredited or not, invest in unregistered securities online (with limits on the amounts that can both be invested, and raised, in a year). The tech-fueled vision of bypassing stuffy financial intermediaries in favor of a new-class of SEC-registered and FINRA member “crowdfunding portals” has inspired a flotilla of startups to enter the space.

Many of the new entrants have affiliated agreements with brokerdealers. Some have launched their own b/ds.

WealthForge launched its own b/d to provide all the services needed to complete a private securities transaction, including investor accreditation, regulatory filings and escrow. Co-founder and CEO Mat Dellorso says the new rules—and bringing the process online—have spurred their growth.

“When you bring the internet and you’re allowed to advertise a private security through 506(c), more investors do take part,” he says. WealthForge has completed 150 private financing transactions, bringing in 2,500 investors. “A traditional investment bank might complete three or five a year,” he says. “It’s a lot more volume because it’s more transparent and online now.

“Normally these transactions take weeks and months, but an investor can literally invest in a private placement on our platform in a matter of minutes,” he says.

Dellorso doubts they will do much work with firms looking to raise capital through the exemptions for non-accredted investors.

CircleUp is another new broker-dealer with a focus on consumer products and retail companies. Bhakti Chai, which makes Fair Trade Certified tea, raised nearly $865,000 on the platform.

Folio Institutional, a self-clearing broker/dealer, saw the interest around equity crowdfunding and decided to launch an online equity and debt-funding platform in September. Since the firm can custody the securities, it can enage in secondary-market transactions and, potentially, public offerings.

For the entire article from WealthManagement.com please click here

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Three years after the JOBS Act was passed, it seems that Washington is back for more–a curtain call if you will–making it easier for small ventures to raise capital.

The House Financial Services Committee in early June floated a draft bill that would allow the creation of “venture exchanges” tailored to the needs of small companies looking to raise money. In many ways, the success of the JOBS Act hinges upon the creation of such markets. A healthy secondary market created liquidity that is critical to building investor confidence and creating a robust alternative to the global markets that today are dominated by enormous corporations.

If you are looking for a broker-dealer to get you started, click here. Brokerdealer.com is the leading database for dealers around the world.

The new proposed venture exchange laws are aimed at increasing access to liquidity for early stage investors in private startups and small businesses (some of which could be JOBS Act enabled investors), as a lack of liquidity was a concern voiced by some surrounding the new laws for equity crowdfunding with non-accredited investors. 

Investors in technology startups, for example, are likely to have to hold their position in any one investment for an average of 7 years. Creating opportunities for selling private stock in a startup investment sooner through venture exchanges has the potential to reduce some of the early stage investment risks.

These new venture exchanges could create markets that allow early investors who invested via equity crowdfunding to trade shares far before any kind of liquidity event like a public offering (IPO) might take place, spelling an opportunity for liquidity for those early investors. 

The number of IPOs has gone from an average of 311 from 1980-2000 down to an average of 99 IPOs each year from 2001-2011 so opening up other alternatives for liquidity will de-risk the growing number of startup investments happening online.

This is yet another step towards reforming our capital markets. The first step was to enable access, and was addressed by Titles II, III & IV of the JOBS Act. So regardless of your opinion on this matter, the summer is shaping up to be an interesting time for equity crowdfunding investors, accredited and non-accredited alike.

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But another breed of company is angling to benefit from the Jumpstart Our Business Startups Act: freely traded firms, a few of which have been operating for a long time.

Salon Media Group Inc., SLNM -21.05% a 19-year old financially fighting Internet media business, and Giggles N Hugs Inc., GIGL 21.28% a seven-year old food-and-play-space chain, are among dozens of publicly traded companies that have signaled they intend to solicit investors using the new independence in the JOBS Act. Both trade on the over-the-counter market, and auditors have raised worries about their capability to continue operations.

The businesses are seeking new investors using some of the JOBS Act that lets small-scale private businesses advertise to affluent people, known as “accredited investors,” changing an 80-year old “general solicitation” marketing prohibition designed to safeguard investors.

The companies’ use of advertising independence meant for young start-ups exemplifies how a surprisingly extensive array of players expect to obtain an advantage under the brand new law. “You can place it in the class of unintended effects,” says New York securities attorney Douglas Ellenoff, referring to using the JOBS Act by publicly traded firms. “The entire purpose” of the law “was to allow it to be simpler for private companies to raise money,” he adds.

However, the usage of the brand new rules by publicly traded firms “is totally permissible,” says John C. Coffee Jr., a professor of securities law at Columbia University. He also says he does not see “any damage” in the use of the new rules by publicly traded companies.

Up to now, more than 1,600 businesses–including three dozen publicly traded ones–have signaled their intent to take advantage of the new advertising liberties, according to filings made with the Securities and Exchange Commission between Sept. 23, 2013, and June 30.

Other businesses, including San Francisco-based social media business Twitter Inc., TWTR -1.89% used other provisions in the JOBS Act to their advantage in the past. For instance, in 2013, Twitter used a group of rules in the law that permit growth businesses with up to $1 billion in yearly sales to file private filings in connection with an initial public offering. Twitter kept under wraps details about its profitability as well as the type of threats it confronted until about three weeks before it pitched its stock to investors in the process.

Salon, which now has a market valuation of less than $30 million, has another plan in utilizing the advertising liberties supplied by the brand new law. In-depth fiscal information together with the SEC has filed because it went public 15 years past. Lately, it lined up a third party fundraising platform, Deal Labs Inc., to send e-mails to 80,000 prospective investors describing Salon as an “award winning on-line news Website” with more than 17 million users. “Please see the specific risks,” reads one line in small type in the base of the e-mail that directs investors to the info about those threats.

Among those dangers: Salon’s present auditors have, since 2011, warned that they have considerable uncertainties about the organization ‘s capability to carry on its operations, citing problems such as the history of losses of the company’s. Salon went public in 1999 at $10.50 a share and is now selling stock at 25 cents a share.

Salon’s SEC filings reveal that 29% rose compared with a year before to $900,000 in the quarter ended June 30, while sales was flat. Salon CEO Cindy Jeffers attributes General Motors Co. GM -1.99% ‘s go to cut back on a planned ad campaign.

“It makes sense” for an organization that runs a Web site covering politics, entertainment and other subjects “to use all the advanced technologies,” she says of the choice to raise cash online. In the last two years, Salon has experienced “unprecedented increase” in the amount of “unique visitors” to the Salon.com website, she includes, as well as a successful stock offering will fuel an expansion that “will lead us to profitability.”

One review of the Salon offering states that it’s up to now raised $1 million of the $3 million it seeks, but it does not note that the amount represents a dedication from Salon Chairman John Warnock, a cofounder of Adobe Systems Inc. Mr. Warnock has funneled nearly $14 million into the business over the last five years, Salon says. The omission is “to be respectful of John,” says Deal Labs Chief Executive Aaron Travis. Salon’s “traffic is growing rather unexpectedly since Cindy Jeffers took over as CEO,” says Mr. Warnock. “All the signs for me are favorable.”

Salon and Deal Labs are “in dialogues” with about 20 prospective investors, including a handful that have made verbal commitments to put money into the offering, Mr. Travis includes. A fee collects in the quantity raised.

Giggles N Hugs, the Los Angeles-based family-restaurant chain, this month e-mailed about 20,000 customers with “Chance to invest” in the subject line. “We trust that you, our faithful customers, will participate in our growth goals and become stockholders,” Joey Parsi, the business’s creator, wrote in the pitch.

In the year 2012, he says, he united Giggles N Hugs because he believed being people with a publicly traded firm that had no businesses would make fundraising easier. Instead, he says, the small-scale firm found itself in a fundraising “no man’s land.” Giggles N Hugs lost $984,000 on sales of $1.6 million in the six months ending June 29, 2014, according to SEC filings.

Mr. Parsi says small businesses like his “want additional capital to triumph.” It’s three California places and he expects to add five places during the following year and enlarge into the licensing and merchandising as well as franchising of branded products. Up to now, he says, the business has procured nearly $1.2 million of the $2.6 million it seeks.

Lattice Inc., LTTC 6.52% which supplies risk-free communication services to penitentiaries, spent less than $15,000 on its recent JOBS Act stock offering. That is much less than the more than $100,000 it’d have cost the Pennsauken, N.J.-based telecommunications company to raise the same amount in a conventional private placement, Lattice CEO Paul Burgess says.

Lattice had a $779,000 loss on sales of $4.6 million in the six months ended June 30, according to its SEC filings. In all, it raised approximately $1.1 million from investors who understood the business or individuals linked with it to finance the firm’s ongoing growth.

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The Securities and Exchange Commission is considering changes to its 30-year-old definition of “accredited investor” that could have serious implications for the crowdfunding industry.

Accredited investors are permitted to participate in private securities placements, and since the passage of the JOBS Act in 2012 opened the door to general solicitation for investors, many have been finding those opportunities through crowdfunding platforms.

The current definition of an accredited investor, written in 1982, says it is a person with earned income in excess of $200,000 (or $300,000 with a spouse) in each of the prior two years or one with a net worth over $1 million (alone or with a spouse), excluding the value of his/her primary residence.

Those pushing for change say the income thresholds have not been updated for inflation—that in today’s dollars, $200,000 and $300,000 would be $500,000 and $700,000.

But critics, like Brendan Ross, president of Direct Lending Investments, say such a change would halve the number of accredited households in the U.S., which today make up, by the SEC’s own calculations, 7.4% of all households.

Ross, who manages a short-term, high-yield small business loan fund, told FINalternatives that as regulators “become more educated on the implications of such a change, they will be less likely to move forward.”

“This would negatively impact the investment management industry as the number of accredited investors would sharply decrease. It’s unlikely that the SEC would want to impinge upon the private placement industry, which is the source of most financial innovation. Value investing, small companies, emerging markets, commodity funds, and REITs all started with accredited investors putting money into private placement vehicles, which then evolved into mutual funds.”

For the full story, please visit www.finalternatives.com

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BrokerDealer.com Launches Broker-Dealer Business Intelligence Portal for Global Bankers,

Qualified Investors and Entrepreneurs Raising Capital

New York, NY—May 28–Broker Dealer LLC, a provider of financial industry corporate intelligence and qualified investor databases, announced today the launch of a new, broker dealer web-based portal that incorporates 100,000 broker dealer, investment banker and securities dealer profiles as well as upwards of 20,000 qualified investors extending across 35 major countries, including capital formation brokers and deal investors based in North America, EU, Eastern Europe, China, Pacific Rim, the Middle East and Africa.

Apart from detailed lead generation and decision-maker metadata, the company’s platform incorporates a range of social media applications, including a “deal room” forum that enable capital-seeking business enterprises to share their business plans with professional deal-sourcing bankers and private funding sources that include qualified angel investors, hedge fund managers, private equity and venture capital firms and family offices seeking investment opportunities. The firm’s investor database is available for free and is accessible via http://BrokerDealer.com.

“Brokerdealer.com could be the right domain for this new player in the business intelligence space when considering the evolution of the JOBS Act in the U.S., the global embracement of crowd-funding in advance of traditional investment bank capital-raising techniques and the depth of global contact information available within the brokerdealer.com database. The social networking function within its subscriber-based platform is compelling, and it’s advertising-free.”

Brokerdealer.com was designed to help connect companies seeking broker dealers, funding, underwriting, or lead manager assistance for debt and equity offerings. The platform was created out of the need to give entrepreneurs, investors and data providers the ability to connect with one another. The broker dealer databases found on brokerdealer.com includes information such as broker dealer’s name, address, phone, URL/emails, and most important, a description of what the broker-dealer actually performs. If a company is seeking to raise capital for a real estate project the user will be able to filter the broker dealer databases – on a global scale – and reach out.

Brokerdealer.com anticipates adding 45 additional securities dealer and broker directories, giving network members of brokerdealer.com upwards of 75 of the world’s most popular broker dealer lists.

For Additional Info:

Email: brokerdealer@brokerdealer.com

Twitter: @broker_dealer

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Brokerdealer.com provides below extract courtesy of NY Times and reporter Amy Cortese.

Fundrise co-founders Daniel Miller (l) and David Miller. Photo courtesy of Vannessa Vick for the NY Times

Fundrise, a website that aims to draw in a broad range of investors to finance commercial real estate deals, has raised more than $31 million in its first round of funding from a group of prominent technology, real estate and other backers.

Fundrise, based in Washington, is a pioneer in real estate crowdfunding, allowing individuals to directly invest with as little as $100 in hotels, apartment buildings and other development projects. Until recently, even small-scale real estate projects typically had been the exclusive domain of wealthy investors and private equity firms.

The company was founded by two brothers, Benjamin and Daniel Miller, in August 2012, shortly after the JOBS Act legalized crowdfunding, although they began working on the concept as early as 2010.

The financing round was led by Renren, a large social networking company based in China. It is also being backed by several real estate firms and individuals including executives of Silverstein Properties, the owner and developer of the World Trade Center; Rising Realty Partners, a Los Angeles developer; the Ackman-Ziff Real Estate Group; Scott Plank, a real estate developer and former Under Armour executive; and Richard Boyle, former chief of Loopnet, an online commercial real estate listing service. The Collaborative Fund, an investment fund, also participated in the round.

For the full story from the New York Times DealBook, please click here.

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Brokerdealer.com credits TABB Forum and submission from Kim Wales/Wales Capital with below

Crowdfunding is on the rise in today’s re-regulated and democratized global capital markets, and the JOBS Act is proving to be a game-changer for institutional investors.

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