Ridiculous: SEC Boss Refused To Move Forward On Required Crowdfunding Rules To Protect Her 'Legacy'

from the her-legacy-is-a-joke dept

Tue, Dec 4th 2012 7:58pm — Mike Masnick

Earlier this year, the JOBS Act passed Congress with widespread bipartisan support, and was signed into law by the President. There were a few different pieces involved, but one that got plenty of attention was the opening up of crowdfunding for equity (i.e., owning actual shares in a company). In the US, you can't do a crowdfunding campaign that results in giving ownership in the company. Until the JOBS Act passed, that was considered a form of a public offering, which is a highly regulated area, in which you have to file all sorts of documents with the SEC, get an underwriter, go on a road show, all that fun stuff. But for smaller businesses looking to raise some money, this doesn't make much sense. The JOBS Act opened up a small sliver of space in which smaller companies could raise a little bit of money in exchange for equity. The SEC actively opposed the whole thing from the beginning, but once the bill was law, it was also tasked with setting up the rules for how it would work to limit possible fraud.

Back in August, we noted that the SEC's rules were due out any day, but had been pushed back at least a week as various state regulators argued that the whole thing was just going to be used for massive scamming. Since then the whole process has been fought over and changed numerous times. Newly released emails suggest that it wasn't because the SEC was struggling with setting the best rules possible... but because SEC boss Mary Schapiro was worried about her legacy. She's leaving the position in two weeks and apparently didn't want to put in place strict rules for fear that it would tarnish her reputation as being "pro-investor."

"I don't want to be tagged with an anti-investor legacy," Schapiro wrote in an e-mail to [Corporation Finance Director Meredith] Cross with the subject line "Please don't forward."

"In light of all that's been accomplished, that wouldn't be fair, but it is what will be said ..."

Whether or not you think the rules are good or bad, we should have SEC commissioners who focus on doing what's right... now how things are going to look on their resume when they go hunting for a job in the industry after leaving public service.

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Filed Under: crowdfunding, investment, legacy, mary schapiro, sec

15 Comments

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out_of_the_blue, 4 Dec 2012 @ 8:16pm

"just going to be used for massive scamming."
You skipped right over her real reason: "anti-investor" in DC's bizarro-world usage means "pro-scammer". That's sure to be important to people who'd hire her.

More seriously, if the SEC were doing its job, half of Wall Street and Chicago Mercs would be in jail, and the rest awaiting trial.

BTW: more lousily written than usual, your point, if any, is obscured.

Is anyone here really certain that Mike "Streisand Effect" Masnick...
http://en.wikipedia.org/wiki/Streisand_effect
Doesn't get a little thrill every time I post this link?
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Anonymous Coward, 4 Dec 2012 @ 8:57pm

Well ... maybe she doesn't want to rush these rules by too quickly only to have the next person pick up the tab. Perhaps it's possible they want the next person to set the rules that s/he will have to work with for the rest of his term and to take his time to ensure rules that make sense and to perhaps adjust them during his or her term. Two weeks really isn't a lot of time to set sensible rules and allow for public input, is it?
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vegetaman (profile), 4 Dec 2012 @ 9:31pm

Re: "just going to be used for massive scamming."
All those in favor to changing the three button choices above every comment to read "insightful", "funny", and "stupid"... say 'I'.
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Anonymous Coward, 4 Dec 2012 @ 9:54pm

Re:
Two weeks? Did you read the article?
"Back in August, we noted that the SEC's rules were due out any day"

And it was signed into law April 5, 2012. http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act
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slander (profile), 4 Dec 2012 @ 10:10pm

Re: Re: "just going to be used for massive scamming."
Me too, me too!
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Mike Masnick (profile), 4 Dec 2012 @ 10:49pm

Re:
Two weeks really isn't a lot of time to set sensible rules and allow for public input, is it?

Two weeks? Original law was passed in April, and the rules were "due" by July. They were then postponed until August... and then again...
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Anonymous Coward, 4 Dec 2012 @ 11:41pm

"now how" -> "not how" ?
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Anonymous Coward, 5 Dec 2012 @ 1:59am

this is the type of person that is in loads of high power positions. their interest is with them self, first, second, last, not with the position they hold or the effects their decisions have on everyone else. when she leaves, companies will be falling over each other to get her. hopefully, whoever gets her will learn before it's too late to correct!
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Anonymous Coward, 5 Dec 2012 @ 2:15am

Re: Re: "just going to be used for massive scamming."
"I"? What about "skeepedyboobopshowah"? That would mean that not just any old moron can sign up, to boot! "I" is so common it might as well be the Pirate Party logo!

(not serious, y'know)
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Jay (profile), 5 Dec 2012 @ 3:48am

Re: Re:
Mike, you would really look into Shapiro's background...

She started as a special judge for corporations (arbitration) who took a $9 million "gift" in accepting the job of being an SEC regulator. Since being in the position her rules have been very lax on corporations which allowed the excesses of Wall Street to kill the economy.

You've talked about arbitration before and she wasn't suicidal. She only tilted against the people paying her 2% of the time.

Given this background, do you really think she was going to change into someone that was going to be fair to the public?

Her reign is merely mired in scandal and corporate cronyism. Nothing more can be said.
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That Anonymous Coward (profile), 5 Dec 2012 @ 4:37am

Who needs Wikileaks?
Just grep all the mails with subject line of do not forward and we'll have a treasure trove of many bad acts and stupid behavior.

Your "Legacy" is more important that actually doing your job, I'd like back all of your pay for the time you failed to carry out your job and end any benefit package you have from it.
Stupid needs to hurt, and taking away the money seems to be a really good tool to make them hurt.

Imagine how fast we'd avoid the fiscal cliff if we cut off Congress's benefits and pay until they actually did their job.
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Pixelm1, 5 Dec 2012 @ 4:50am

Anti investor means anti public. The problem is that these proposed rules reduce disclosure and therefore make it easier to hurt people. She doesn't want her legacy to be a lot of people who have lost money to crooks. Isn't that what thinking about your legacy supposed to do?
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Anonymous Coward, 5 Dec 2012 @ 5:59am

Re: Re: Re: "just going to be used for massive scamming."
Bill Cosby has a copyright on that word, sorry.
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Tunnen (profile), 5 Dec 2012 @ 8:05am

Leaked faster
The only way to get a memo/email forwarded faster than putting "Do Not Forward" would be to put Classified, Confidential, or a Copyright claim on it. =P
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gorehound (profile), 5 Dec 2012 @ 8:17am

Typical Scumbag Politician Type !
Would love to see the whole lot of em Tarred & Feathered in Public.
Those types need to be Humiliated Big Time !
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