They missed the deadline. We knew they would. They knew the deadline was coming for months and months but they did nothing but offer platitudes. They knew what the stakes were for a fragile recovery. They placed another self-inflicted wound on the economy anyhow. It turns out that at the highest levels they thought only of their own personal gain and their perceived “reputations.” They cowered in fear of fringe minority groups who were vocal in their fear mongering. Very little time seems to have been spent on actually doing their jobs and filling their role in the decisions already made regarding the needs of the economy and job creation. They seem absolutely incompetent and not up to the task.
No, I’m not talking about Congress and the fiscal cliff–I am talking about the SEC. Just like the Fiscal Cliff, the deadline passed for rule making under Title III of the Jobs Act on December 31. Nothing has happened–not even on the Rule 506 changes that had a July 4 deadline. Unlike the Fiscal Cliff, there was no suspense remaining that the SEC would meet the deadline. After all, I predicted this back in May despite what was being said by the SEC at the time. By year end, even the SEC was admitting the obvious. At this stage, no one can reasonably predict when investment crowdfunding will be legal in the U.S. or whether what emerges will even make sense for either issuers or portals. No detail is offered, no transparency is given.
What has emerged has been predictable. Those that are inclined to break the rules or press the “gray areas” are using this lengthy delay to their own benefit. After all, I have already been solicited by email for an investment of “as little as $1,000.” Portals that raised capital and scaled operations based on the deadline are no closer to revenues than they were when the law passed in April. Many will not survive the wait. Clearly the bigger loss is that even when Congress acts, in a bi-partisan manner, to do something intended to help the small business owner who is starving for capital, nothing actually happens. There is still a giant blackhole of capital funding for startup and early stage companies that the banks and institutional investors are not inclined to fill any time soon. With all the coverage of the Fiscal Cliff, I cannot help but recognize that in this era of deep and illogical partisanship, Congress does actually do something when there is no alternative to not doing something. Administrative agencies have no such sense of accountability. The JOBS Act was signed into law in early April. Government did something, in an election year no less, and the SEC has totally dropped the ball. The deadline is now officially missed. This is a bigger story than the Fiscal Cliff. Congress predictably kicked the can down the road on the Fiscal Cliff. But give credit where credit is due–at least with Congress the can actually moves.