For the Record: Crowdfunding Regulations

“We just want to make sure that the intention of the JOBS Act is to promote small business, and make sure that the regulations are smart, efficient and not unduly burdensome,” Nick Hartofilis, director in risk advisory services at accounting firm Kaufman Rossin, said.

Hartofilis said the U.S. Securities and Exchange Commission’s equity crowdfunding proposal, which would allow startups and small issuers to raise capital through the sale of crowdfunded securities, is a “game changer” for investors. “They are going to raise $1 million as the maximum amount in a 12-month period and you don’t want professional fees and other fees from paying people to follow the regulations to eat into that capital,” he said.

Bao Nguyen, a manager at Kaufman Rossin, said the SEC is in a “tough situation” in dealing with the additional regulations while also writing rules to boost the economy through crowdfunding. “They’re going to have to look cautiously at what rules to write in this space, “Nguyen said. “they don’t want to have to raise $1 million with the cost of $100,000 to get it done. The cost associated has to be considered.”