The Ugly Side of Financial Reform
By Arnold Kling
Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.
One of the scariest phrases in the English language is “comprehensive reform.” It means large legislation, studded with these sorts of land mines. If you really want to create a jobless recovery, then I recommend enacting legislation that makes it harder to start a business.
Of course, anyone who votes against the bill will be branded as an opponent of necessary financial reforms.