Not yet quite the in crowd, but inching closer;
Startups and entrepreneurs would be able to tap large numbers of ordinary investors for small amounts of capital under long-delayed "crowdfunding" rules regulators advanced Wednesday.
The Securities and Exchange Commission voted 5-0 to propose rules aimed at helping startups sell shares through online "portals," where supporters say thousands of investors could pore over the business plans of small companies and choose promising investments. The proposal would implement a key provision from last year's Jumpstart Our Business Startups Act, a law meant to spur business activity.
"We want this market to thrive, in a safe manner for investors," SEC Chairman Mary Jo White said.The SEC has advanced to, proposing rules.
The same SEC that had Bernie Madoff and his Ponzi scheme gift wrapped and handed to them on a platter by one of his competitors years before they 'caught' him.
Critics say the rules make it easier for bad actors to pitch fraudulent schemes to unsophisticated investors. Crowdfunding could lead to an increase in so-called affinity fraud, in which individuals of specific religious or ethnic communities are targeted by wrongdoers, said Luis Aguilar, a Democratic commissioner, before the vote.Affinity fraud being exactly what Madoff did to people like Steven Spielberg, Kevin Bacon, Kyra Sedgewick and the owner of the NY Mets. Under the SEC's rules;
An enforcement case 16 years ago gave the Securities and Exchange Commission its first shot at figuring out how Bernard Madoff could rack up favorable returns with such uncanny consistency. After that, it received repeated warnings from outside whistle-blowers and at least twice looked into Mr. Madoff's brokerage itself.
Each time, it blew its chance. It was only last week, when Mr. Madoff allegedly confessed to his sons that he was running what amounted to a "giant Ponzi scheme," that the apparent $50 billion fraud came to light.
"This is a debacle for the SEC," said Joel Seligman, an SEC historian and president of the University of Rochester in New York. "The commission has a lot to answer for."We're from the SEC, and we're here to help you;
He was in fact a broker-dealer and regulated as such by the SEC. Several former SEC regulators said they thought Mr. Madoff's broker-dealer business dealt entirely with trading by Wall Street firms, not by individual investors.
Mr. Madoff enjoyed a good reputation on Wall Street that may have helped him evade suspicion. His market-making business serving institutional investors went back to 1960, and he was a former chairman of the Nasdaq Stock Market. The SEC itself tapped his expertise, naming him to a 25-member advisory committee on market structure in 2000 and frequently calling on him to be a commentator at agency round-table discussions.
He even got his name informally applied an SEC rule. The "Madoff exception" allowed market makers such as Mr. Madoff to sell stock short to facilitate a customer buy order, even if the stock in question was ticking downward.Here's an idea; let the investor beware. Don't pretend that investors can rely on the SEC.