Yesterday was an important day for GROUNDFLOOR, for our growing community of microlenders and for the long-awaited eventuality when the full force of the Internet will be felt in finance.
In a public meeting in Washington, D.C., three years after passage by Congress of the 2012 JOBS Act, the Securities and Exchange Commission approved a much-needed amendment to a little-known and little-utilized corner of securities law known as Regulation A. Because Regulation A offerings are open to all, not just “accredited investors,” the amendment gives hope to many that the promise of broad-based “equity crowdfunding” can now start to be fulfilled. In the minds of many, this is a good thing for savers, investors, builders, entrepreneurs and the economy.
As has been reported publicly, for almost a year we have been patiently working our way through the regulatory process to offer securities under Regulation A. All of us who are a part of GROUNDFLOOR, the first and only community of its kind that is 100% open to all, therefore enjoy a huge head start. In fact, our efforts have already yielded state-level approval in Georgia and eight other jurisdictions. We expect to receive federal approval by the SEC soon. That approval will enable us to begin expanding nationwide.
We have long anticipated this action by the SEC. It raises the limit on securities we will be allowed to sell under Regulation A by twenty times compared to what we have been allowed to sell in Georgia during our pilot program here. We had expected to benefit from an expansion of the limit–but not this much!
Even while we cheer what this development does, it is also important to take note of what it does not do. Specifically, yesterday’s action does not “de-regulate” the marketing and sale of financial securities. Far from it. Gaining the requisite regulatory approval to use Regulation A still demands a deservedly lengthy and exhaustive process of disclosure, scrutiny and compliance review. We had to register our offering with the federal government, as will those who may eventually follow us. That requirement means issuers like GROUNDFLOOR must sweat the details to comply with highly specified rules and to weather intense scrutiny by auditors, legal advisors, and regulators.
Despite knowing the costs, the time and the uncertainty that would be imposed on us, we embraced the process because we believe in transparency and disclosure. We believe you and all investors deserve that, and more. You deserve a world of financial opportunity that is as broad and accessible as you are informed and discerning. The very architecture of the Web enables and even demands it.
Yesterday, the SEC outlined a pathway that heads in the right direction of history and progress. As a community, it is now upon us to take it. Are you ready? Join us, tell us what you think at firstname.lastname@example.org or feel free to continue the discussion in the comments below.