NYSSCPA, Principal Drafter, January 2014
Our focus as stakeholders in this process is as Certified Public Accountants, many of whom, by virtue of our training and experience, can speak knowledgeably about preventing, deterring and detecting fraud. As such, we are versed in fraud risk and are continually working on ways to mitigate the occurrence and magnitude of fraud perpetrated against the investing public including individuals, organizations and fiduciary entities. Given this focus, our response is limited to the sub-set of the proposed regulations identified below.
In general, we see that a reduction of regulatory oversight through relaxation of rules is at the expense of security and transparency in the investment vehicle known as “Crowdfunding.” We note with concern that the Securities and Exchange Commission (SEC) is considering a tradeoff between transparency and functionality especially in connection with a new and, as of yet, untested method for offering securities to a broad cross-section of potential investors. We suggest that continued conservatism and caution be the hallmark of a regulator such as the SEC. We urge the SEC to consider the many recent financial events rooted in fraud and dereliction on the part of reporting company when it evaluates the level of oversight of the Crowdfunding investment vehicle. For example, on page 9 of the request for comments (RFC), the SEC states, “A person that operates such a web site only for the purchase of securities of startups and small businesses, however, may find it impractical in view of the limited nature of that person’s activities and business to register as a broker-dealer and operate under the full set of regulatory obligations that apply to a broker-dealer.”…
Recent Comments