NASAA says “The (blue) Sky is Falling”

According to the North American Securities Administrators Association (NASAA), the “blue sky” laws which allow states to oversee securities and brokers is a good thing (for their dues).

NASA, the National Aeronautics and Space Administration, and not to be confused with NASAA, said blue sky is merely a refraction of visible light through the atmosphere. NASA agreed blue sky is a very good thing as it allows people to breathe.

The financial term “bNASAA and Crowdfundinglue sky” law dates back to the turn of the 20th century when a judge said speculative financial schemes had no more substance than “blue sky.”

Now, NASAA is telling the world at large, “THE SKY IS FALLING!” Indeed, large chunks of the ether are plummeting downward at record speeds these days, threatening to take out the NASAA in a monster storm of fresh air.

NASAA points to a recent “analysis” of Internet domain names in the US and Canada. Among other things, this study found “nearly 8,800 domains with ‘crowdfunding’ in their name as of Nov. 30, up from fewer than 900 at the beginning of the year.”

Even more worrying to the confederacy of securities regulators, “2,000 (of the websites) contained content, more than 3,700 had no content and more than 3,000 appeared to be ‘parked’ and serving as placeholders to reserve a domain name for later use or sale.”

This clearly points to an impending collapse of the blue sky. Exactly how the NASAA will cope with this injection of fresh oxygen remains to be seen, but some privately speculate an increase in brain function which will allow the NASAA to become rational.

Why is the sky falling? The JOBS Act, at least according to the NASAA. The NASAA is reacting to the sharp increase in domain registration as if this is something entirely unique in the history of government, laws and market reaction to the government. “Of the domains with ‘crowdfunding’ in their name, about 6,800 have appeared since April 2012, when the JOBS Act was signed into law,” the NASAA report states.

DUCK! Here comes another breeze!

A quick look at the financial history of the markets in the United States shows any time the government does something to the marketplace, people react. Since JOBS is supposed to ease the rules on investing in small companies and crowdfunding will be an integral part of this, a sharp upswing in crowdfunding-named websites comes as a surprise only to the NASAA. By their reasoning, the blue sky is indeed falling because NASAA doesn’t understand the crowdfunding marketplace.

Anything that is not understood has to be bad, of course.

In a related matter, InvestmentNews reports “Crowd funding takes hit in Massachusetts” [sic]. Massachusetts, official slogan “We never met a tax we didn’t like and try to implement,” has filed charges against three out-of-state residents in two different companies. The state complains fraud was committed by the three people.

InvestmentNews, relying on the same logic that the NASAA uses when complaining about being clobbered by a breeze, says this is solid evidence crowdfunding is under attack in the Land of the Kennedys.

By the very definition, crowdfunding requires a crowd, not one or two people.

Republicans pitch “Trickle-Down-Crowdfunding . com”

Republicans take crowdfunding to the masses

In an effort to stimulate the stimulators, Presidential Candidate Mitt Romney and the Republican Party have launched a crowdfunding campaign they are calling – Trickling With The Money.

“This is simply revolutionary,” Mr. Romney said from the front seat one of his dozen luxury cars to 25 reporters packed into the back seat with two Secret Service security guards. “We’ve taken the trickle down economic approach which was proven by Ronald Reagan and we’re turning it around to jump start this economy. Instead of money trickling down from the upper reaches of the economy, we’re asking people to send money up the economic food chain to the people who really make the nation run. Frankly, they need enough money to invest in business and they need it from the 99 percent because the government is not handing out any more billion dollar checks.”

Mr. Romney issued a passionate plea to the 99 percent to give “whatever you can and then some” to the 1 percent so they have the money they need to invest in business. He also announced the website Trickle-Down-Crowdfunding.com

“The 1 percent has just about exhausted all their available disposable investment money. They just don’t have the money to invest like they used to. They need money to reinvest in the economy, money to buy manufacturing plants, trucking companies for distribution of their new products and giant discount shopping centers so they can sell all this stuff they will be making,” the former governor of Massachusetts said.

He explained the 99 percent are actually investing in their own futures.

“These industrial plants, these trucking companies, these malls, this is where you will work. Ok, maybe you won’t work in the industrial plants unless you move to China, but you will be able to get jobs in the trucking industry and find gainful employment at minimum wage in the shopping malls selling the stuff,” the presidential candidate said. “You’ll have a job, a real job. That’s what’s important. Think about what it will mean to your children to know their parents finally have a job. Your children may even be able to work right alongside you. How’s that for supporting the family?”

Mr. Romney said that when people have a job, they are able to buy stuff.

“At least that’s what I’ve been told. I’m pretty sure people who don’t have money can’t buy things,” he said. “This is why people need to get behind this crowdfunding campaign for the 1 percent. Support those who support you.”

He said a clear majority of Americans are fully capable of supporting this campaign.

“If we start with 100 percent and take away the 1 percent who need the money to invest, we’re left with 99 percent. If we take away the 47 percent who don’t do anything, we still have 52 percent of the American people who have their own money. The other 47 percent have government money and as a member of government, I say they need to give that money to people who can make it work. Let’s do this!” he said. “Get up America! Do your part! Let’s show what the 99 percent can really do!”

Vice President nominee Paul Ryan also praised the plan, calling it the most forward-thinking and ambitious plan he’d ever seen to turn the American economy around and put it back on a solid footing, after he checked with the campaign’s spin doctors to make sure it was the right thing to say.

“We, as a nation, need to get behind this plan and support President Romney’s goal of supporting the 1 percent so they in turn can make more money and provide jobs to the people who need it, after taking a necessary profit of course,” Senator Ryan said. “The money invested today will eventually create job, jobs we need.”

Mr. Romney said he chose the crowdfunding platform to raise money because “it reaches out to the 99 percent” and lets the 1 percent take care of how the money is spent.

SEC Chair & Former Chair Challenged To Cage Match For Right To Determine Who Makes Crowdfunding Rules

The federal government using the infinite wisdom that has led to a $15 trillion deficit has decided to order the SEC inject itself into private lives by requiring people who want to go into crowdfunding to register all in the name of fiscal accountability. Why?  Because one of the government mottoes is, “If it ain’t broke, fix it ‘til it is.” Since crowdfunding has so far been incredibly simple and so easy anyone with an internet connection could do it, government regulators have insisted something be done to complicate matters.

The SEC website has several links discussing the Jumpstart Our Business Startups (JOBS) act which contains language like “Cost-effective access to capital for companies of all sizes plays a critical role in our national economy, and companies seeking access to capital should not be hindered by unnecessary or overly burdensome regulations.” Reduced to plain English this means “It’s going to get a lot harder as soon as we find enough sociologists and lawyers to make it as confusing as possible.”

Actual crowdfunding websites approach it from the “Hey! C’mon and sign up today!” direction.

Go to the SEC website and you might be able to find a “FAQ” list to help you register your crowdfunding company. Pack a lunch because you’ll be there a while looking for it.

Since I have a near genius IQ, I am too smart to understand the FAQ. So I contacted a friend who once worked for the government.  Well, he was a test subject in a military experiment, so close enough.  Without further ado, here is what we, Richard “The Vermin” Thundersquat (he moonlights as a professional wrestler) and I came up with after reading the FAQ.

Question: I want to start a crowdfunding business.  What do I need to do?

Answer: We need the following: Your name, your spouse’s name, a name of a child you have and one you do not have, the name of your uncle’s aunt’s sister’s brother’s cousin’s kid’s former college roommate, a urine sample, your urine sample, and a partridge in a pear tree.

Question: What if I want to seek crowdfunding for a project that will help orphans and other children?

Answer: Well, since that would be a good idea, we can’t let you do that. There is no federal regulation yet and without federal regulation, good things may happen. We cannot allow good things to happen without federal oversight because who would reap the rewards? Small businesses, startups and inventors who actually have valid ideas or the government? Can I have a glass of water?

Question: But I have a valid idea that is only slightly cooler than 0 degrees Kelvin, will not cost much money and has the ability to help millions of people without interference from any government entity. And I don’t have a glass for your water.

Answer: Now this is just ludicrous. How can anyone expect to get anything done without oversight from the government? We have to have a hand in it! There are regulations to institute, policies to follow, lobbyists to pay and taxes to levy! And stuff!

Question: So, you are basically saying I cannot use crowdfunding because the government does not have a hand in it, and the government does not have a hand in it because they don’t have a hand in it?

Answer: You betcha!

 

So there you have it, what Richard and I figured out about crowdfunding and the SEC. Since we could not get a direct answer, we have decided to challenge SEC Chairman Mary Shapiro and former chairman Christopher Cox to a tag-team cage match, winner gets the right to determine how crowdfunding will be regulated. We’re negotiating the rights to put it on Pay Per View and failing that, we’re have a crowdsource funding campaign to raise money to rent a high school gym somewhere.

by Ben Baker