On August 8, 2014, Representatives Darrell Issa, Jared Polis, Scott Peters and Vern Buchanan, co-chairs of the House Innovation and Entrepreneurship Caucus, along with a bipartisan group of 26 other representatives, sent a letter to Chairman White of the SEC taking the SEC to task for failing to complete the crowdfunding rules required by Title III of the JOBS Act. [Polis-Issa Letter] Those rules were supposed to be effective by the end of 2012. In the letter, the Representatives wrote that "A key feature of the JOBS Act was Title III, which was supposed to reduce the burdens and hurdles for US startups and entrepreneurs to gain access to critical new sources of capital from more modest investors....Due in large part to the lack of finalized federal rulemaking, states are now leading the way, harnessing the power of new technologies to connect entrepreneurs with investors....We urge the SEC to comply with Congressional intent to build a new cutting edge infrastructure that will provide innovative funding opportunities for startups and robust investor protections for decades to come." Unlike the confidential submission process for emerging growth companies, which was effective upon the JOBS Act being signed into law in April 2012, and appears to be wildly successful, the JOBS Act requires the SEC to promulgate rules for crowdfunding. The proposed rule was issued only in October 2013 and the comment period ended in February 2014. Meanwhile, at least seven states have enacted crowdfunding legislation and many others are considering such legislation, relying on the Securities Act intrastate exemption. The SEC continues to promise that the rules are forthcoming.
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