Get All Access for $5/mo

Crowdfunders Step Up Lobbying for SEC Rules Members of the crowdfunding community descended on Washington, D.C., calling for the regulatory agency to finalize rules.

By Catherine Clifford

Opinions expressed by Entrepreneur contributors are their own.

Joy Schoffler
Doug Ellenoff, a partner at lawfirm Ellenoff, Grossman & Schole, speaking at the National Press Club in Washington about how the crowdfunding community has taken necessary precautions to protect investors.

Crowdfunding advocates raised the volume today on their call to push the Securities and Exchange Commission to finalize rules needed for business owners to raise equity through crowdfunding.

"This is a story about capital," said Sherwood Neiss, principal of consulting and advisory firm Crowdfund Capital Advisors and a chair of the not-for-profit crowdfunding organization Crowdfunding Professional Association. He was one of about a dozen crowdfunding supporters making their pitch at the National Press Club in Washington, D.C., today.

The SEC has already missed several deadlines to write rules to structure the implementation of the Jumpstart Our Business Startups Act, known as the JOBS Act.

SEC spokesperson John Nester said in an email that Commission is working on the rules among other priorities and that they'll be done "as soon as possible," but it is putting an "emphasis on getting them right."

Related: Crowdfunders Press the SEC: What Is Taking So Long?

"We can not move without the SEC's help," said Candace Klein, the CEO of SoMoLend, a debt platform to help local communities support the small businesses in their neighborhood, and a co-chair of the Crowdfunding Professional Association. The next step would be for the Commission to issue proposed rules for public comment before voting on a final version.

Klein expects "some kind of movement" toward the end of this year, but there is continued uncertainty as to whether the JOBS Act rules will be handed down for public comment before or after Mary Jo White officially takes over as SEC Commissioner later this year.

Klein says that members of the Crowdfunding Professional Association have met with SEC officials at least 30 times to help them understand crowdfunding and the protections already in place and the precautions that the industry is taking.

Related: Loans, Contracts and Jobs: How Federal Spending Cuts Could Affect You

For example, one fraud-prevention service available to crowdfunders is CrowdCheck, which provides a background report to all investors in a clear and readable manner. CrowdCheck founder Sara Hanks, a securities lawyer with 30 years' experience, says she is working to dispel the concern that entrepreneurs using crowdfunding "are going to defraud our grandmothers." Chris Tyrell, the Principal of Nehemiah Investments, a family investment office in Princeton, N.J., pointed out that equity crowdfunding has already been happening across the globe with very high success rates.

The JOBS Act, passed in April, will allow entrepreneurs to sell a portion of their company equity to anyone with the cash and the interest, not just restricting investments to accredited investors as under the current law. It also would lift a ban that prevents entrepreneurs from publicly soliciting money.

Related: Entrepreneurs Like Obama's Call for Tax Reform, Immigration Overhaul and Deficit Accord -- Minimum-Wage Hike, Not So Much

Have you raised money for your business with crowdfunding? If so, what was your experience like? Leave a comment below and let us know.

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick


How to Close the Trust Gap Between You and Your Team — 5 Strategies for Leaders

Trust is tanking in your workplace. Here's how to fix it and become the boss your team needs to succeed.

Health & Wellness

Get a Year of Unlimited Yoga Class Downloads for Only $23 Through June 17

Regular exercise has been proven to increase energy and focus, both of which are valuable to entrepreneurs and well-known benefits of yoga.

Growing a Business

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.

Business News

'Passing By Wide Margins': Elon Musk Celebrates His 'Guaranteed Win' of the Highest Pay Package in U.S. Corporate History

Musk's Tesla pay package is almost 140 times higher than the annual pay of other high-performing CEOs.

Starting a Business

I Left the Corporate World to Start a Chicken Coop Business — Here Are 3 Valuable Lessons I Learned Along the Way

Board meetings were traded for barnyards as a thriving new venture hatched.

Business Culture

Why Remote Work Policies Are Good For the Environment

Remote work policies are crucial for ESG guidelines. Embracing remote work can positively impact your business and employees.