Attracting broad bipartisan support, the Fix Crowdfunding Act cruised through the U.S. House this month.
The bill addresses an issue in the crowdfunding space: many investors who contribute to crowdfuding campaigns are non-accredited, and thus aren’t offered any protections against crowdfunding fraud.
The bill aims to give those investors the same protections afforded to accredited investors.
From Forbes:
The bill extends the same protections currently available to accredited investors to non-accredited investors. In the current legislation there is no protection for investors that invest in company that is committing fraud via the crowdfunding portal. The new bill allows crowdfunding portals to disqualify issuers that are found to have provided false information.
Crowd Fund Insider discussed reactions to the legislation:
Congressman McHenry released a statement on the votes;
“Small businesses and entrepreneurs are America’s true job creators, especially in communities like those I represent in western North Carolina. But today, they face a capital crisis. Small business lending from traditional banks is way down and America’s smallest communities are losing more jobs than they create.”
John Berlau, a Senior Fellow at the Competitive Enterprise Institute, described the two bills as making “modest but significant expansions” of the JOBS Act.
“These changes will make it easier for entrepreneurs with small but high-quality companies to raise capital through equity crowdfunding. They will also give middle-class investors more opportunities to build wealth with promising startups.”
The two bills are now pending Senate approval.
