Below is an excerpt of an interview that I recently gave to Mark Wallace of Capitalist Exploits, a community of globe-trotting capitalists who seek unique and profitable investment opportunities in exotic and frontier markets, typically in the private equity space.
For a fresh perspective on how the JOBS Act, specifically Crowdfunding, will play an integral role in building wealth and fueling economic growth, I believe you’ll find this a worthwhile read. Enjoy!
Mark: Dara, you recently spoke at an event in Washington DC where top lawmakers, regulators, Crowdfunding enthusiasts, entrepreneurs and investors all came together to discuss the rules that will eventually govern Crowdfund investing under the JOBS Act. Bureaucrats and entrepreneurs make strange bedfellows. Can you talk a little about the mood of the event?
Dara: That’s true! Sure. I would love to.
It was truly a historic moment in the progression of our capital markets where all of the parties – the legislators who drafted the Crowdfunding legislation, the regulators (SEC & FINRA) who have been tasked with implementing the new rules, as well as the entrepreneurial and investing public whose lives will be affected by the rule changes – were all able to band together, have meaningful dialogue and understand one another’s particular concerns.
The overall tone of the event was congenial and I got the sense that regardless of one’s occupation or political belief, one common objective was shared by all – to see the US financial markets thrive once again.
Mark: Cats and dogs, living together (laughs).
Dara: Nice reference…I have to say that I arrived at the event somewhat skeptical that anything would really get accomplished. However, I left feeling hopeful that our regulators are making a genuine effort to understand the intent of the legislation and to create a regulatory environment that will not only protect the investing public but help capital proficiently reach the nation’s smaller businesses.
Mark: I don’t normally consider regulators to be too forward-looking or innovative. Aren’t you worried that overzealous regulation could end this market before it really begins?
Dara: Appropriately imposed, regulations can be beneficial not destructive. I believe that the entire private company marketplace (Crowdfund offerings as well as private company secondary transactions) needs to have suitable regulatory controls in place so that investors can feel comfortable investing their money there. Investors need to have exposure to this marketplace because this is where today’s growth companies live.
Mark: I agree with that statement wholeheartedly!
Dara: Interestingly, when the 1964 Securities Acts Amendments extended the mandatory disclosure requirements, many in the investment community were in a panic thinking it would destroy the OTC marketplace. Studies have shown that the additional regulatory requirements actually led to a boost in share prices of OTC securities as a heightened level of integrity and investor confidence penetrated the marketplace.
Mark: Yes, investor confidence is productive. But actions speak louder than words. Over-regulation that strangles issuers such as Sarbanes Oxley and Dodd-Frank is not productive. How can we be confident that the regulators can protect investors without stifling the small business capital formation that leads to economic growth and job creation?
Dara: That will be a challenge. I believe that regulating fraud is imperative; however, regulating the risk out of the marketplace is counterproductive. Risk is what built our capital markets and made them the envy of the world. It is what led a small boutique investment bank in 1971 to take a chance as the lone underwriter on a little known company called Intel…to read the entire interview please click here.
You’ll love the part where we discuss how the majority of today’s American workers won’t have the luxury of retiring – EVER – because of a system that limits their exposure to growth investments.