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<p>No one ever confused SEC Chairman Jay Clayton for a
daredevil. He didn’t spend his youth bungee jumping, drag racing, or venturing
to the deep end of the neighborhood pool. He is the staid, strait-laced embodiment
of <a href="http://www.thecrowdfundinglawyers.com/2019/03/14/cryptomom-versus-the-machine/">the
Machine</a>: the credential-and-prestige obsessed cabal of East Coast lawyers
and fancy-degreed personages that land each year at name-brand federal agencies
to pilot the American economy while disclaiming responsibility for the results.</p>
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<div class="wp-block-image"><figure class="alignleft is-resized"><img src="http://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/Clayton.jpg" alt="" class="wp-image-416" width="415" height="279"/><figcaption><strong>Shallow-End Jay</strong></figcaption></figure></div>
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<p>Increasingly those who did jump (literally and figuratively)
into the deep end—the risk-taking disruptors creating the new American economy—are
complaining about Mr. Clayton’s stifling edicts. Circle founder and CEO Jeremy
Allaire recently <a href="https://www.crowdfundinsider.com/2019/05/147641-circle-fires-30-employees-due-to-restrictive-regulatory-climate-in-the-us/">laid
off</a> 10% of his workers blaming “an increasingly restrictive regulatory
climate in the United States.” </p>
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<p>A more cautious group, those too scared to use their own names
are also <a href="https://www.crowdfundinsider.com/2019/05/146775-has-the-sec-slammed-the-brakes-on-blockchain-innovation/">panning</a>
Shallow-End Jay. After quoting several anonymous sources, Crowdfund Insider
recently <a href="https://www.crowdfundinsider.com/2019/05/146775-has-the-sec-slammed-the-brakes-on-blockchain-innovation/">declared</a>,
“Some people believe that Chair Clayton simply wants to dodge a bullet and exit
before the next election cycle hits in full force. He would prefer to end his
tenure at the SEC minus any major catastrophes, imaginary or not.”</p>
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<p>So the future of the U.S. economy may be stalled so Shallow-End
Jay can ensure he has the best possible post-SEC landing spot. Why settle for
the sticky, dirty U. Penn when Harvard may call? </p>
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<p>Reg CF, which crossed <a href="https://www.crowdfundinsider.com/2019/05/147569-three-years-of-reg-cf-44-funding-portals-9-departures-1-suspension-200-million-raised/">year
three</a> this month is one area where SEC paralysis is blatant. </p>
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<p>Reg CF was supposed to revolutionize small-business
capitalization. President Obama <a href="http://www.thecrowdfundinglawyers.com/2018/05/16/mr-clayton-tear-down-this-law-or-at-least-the-parts-that-suck/">described</a>
it as a “game changer” when he signed the JOBS Act into law seven years ago. For
the first time, the potential for massive returns would be available to
everyone, not just a network of venture capitalists and investment bankers. </p>
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<p>On the surface Reg CF seems to be performing swimmingly: </p>
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<ul><li>Total Commitments: $217,383,649 raised since May 2016 </li><li>Total Investors: 234,883</li><li>Total Campaigns: 1,640 </li><li>Average Raise: $219,382 </li><li>Jobs Supported: 8,690   </li></ul>
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<div class="wp-block-image"><figure class="aligncenter is-resized"><img src="http://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/CFgraph.png" alt="" class="wp-image-415" width="778" height="614"/><figcaption><strong>Source for numbers and graph: Crowdfund Capital Advisors</strong></figcaption></figure></div>
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<p>But in reality, it’s sinking. And the weights limiting its buoyancy
are manifest and known within the trade media, the SEC, and the broader
government. </p>
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<div class="wp-block-image"><figure class="aligncenter"><img src="http://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-3.gif" alt="" class="wp-image-417"/></figure></div>
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<p>In March 2017, Edward Knight, Executive Vice President and General Counsel of NASDAQ <a href="http://www.thecrowdfundinglawyers.com/2018/05/16/mr-clayton-tear-down-this-law-or-at-least-the-parts-that-suck/">testified</a>: </p>
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<blockquote class="wp-block-quote"><p>From the outset the SEC’s view of [Reg CF] was they were not for this they and made it, shall I say, needlessly complicated and did not approach it except as this this was something where the public is going to get harmed and we need to narrow it as much as possible.</p></blockquote>
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<p>Six months later the U.S. Treasury <a href="https://www.treasury.gov/press-center/press-releases/Documents/A-Financial-System-Capital-Markets-FINAL-FINAL.pdf">recommended</a>
several improvements, thus far neither the SEC nor Congress has acted. </p>
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<p>But help may be on the way. Corp Fin’s Bill Hinman recently <a href="https://www.crowdfundinsider.com/2019/05/147241-sec-director-of-corpfin-bill-hinman-provides-crowdfunding-update-at-small-business-capital-formation-advisory-committee-meeting/">acknowledged</a>
Reg CF’s shortcomings. Apparently, the SEC will soon publish its own Reg CF (and
Reg A+) recommendations to increase their vitality and by doing so expand investment
opportunity and brighten economic outlook. 

The SEC can juice Reg CF with little effort.
According to Mr. Hinman some of these reforms are on the SEC’s radar:



</p>
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<ul><li>Raise the limit from the nonsensical $1.07M</li><li>Increase individual limits</li><li>Remove the limit for accredited investors</li><li>Relax the solicitation rules </li><li>Allow Special Purpose Vehicles</li><li>Allow CEOs to sign off on financial statements</li></ul>
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<p>These fixes would have a tremendous impact on Reg CF and still provide Shallow-End Jay a soft landing at the Harvard of his choice.  </p>
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<p>By <a href="https://twitter.com/thecrowdfundlaw">Jossey PLLC</a> &nbsp;via <a href="http://www.thecrowdfundinglawyers.com">www.thecrowdfundinglawyers.com</a></p>
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