Thursday, January 24, 2013

A Big Test for the Bankster Controlled New Head of the SEC

Will the SEC actually approve crowdfunding under Mary Jo White, who has just been nominated to head the SEC, and if so, how onerous will be the crowdfunding regulations? There is huge pressure from the banksters to stop crowdfunding in its tracks or to derail crowdfunding via complex rules that will result in the SEC delivering a crowdfunding program that will in actuality result in a stillborn program.

Max Raskin explains how crowdfunding is taking over the world and making it easy for investors to get into deals, except in the US, where crowdfunding remains illegal:
From the pyramids to the Empire State Building, the world’s largest structures have typically been financed by the superrich. New York-based Prodigy Network, best known for marketing the Trump SoHo hotel condominium, is now trying a different model: It’s bringing crowdfunding to real estate, soliciting thousands of investors to buy slices of a skyscraper in exchange for a share of rents and property appreciation. “The big difference from traditional real estate is that instead of buying into a fund with a pool of assets, people invest in a single asset,” says Rodrigo Niño, Prodigy’s founder and chief executive officer. “It lets them control the risk.”

Prodigy has wanted to try crowdfunding almost since its founding seven years ago but didn’t get a chance until it stumbled on the derecho fiducario, a little-known financial instrument in Niño’s native Colombia that allows individual investment in isolated real estate projects. In Colombia, Prodigy has crowdfunded a building called BD Bacatá that will be the nation’s tallest. About 3,100 investors kicked in $171.8 million (COP308 billion) of the $239 million needed to build the 66-story skyscraper in downtown Bogotá. Investors can also buy and sell shares through a resale program, which functions like a secondary market.

Prodigy is currently under contract to buy 84 William Street in downtown Manhattan for $58 million. It plans to invest an additional $32 million. Prodigy says it intends to raise some $26 million in equity from individual investors in 11 countries. FTI Consulting (FCN), based in West Palm Beach, Fla., will ensure that Prodigy complies with the U.S. tax code, as well as anti-money-laundering laws, when accepting money from outside the country. “Instead of buying crappy condos in South Florida, this allows international investors to invest in real markets like New York and in assets that actually make sense,” says Niño, who was raised in Colombia and studied economics in Switzerland. Prodigy says William Street investors will see returns of 15 percent, compared with 21 percent for investors in BD Bacatá.

The company’s investors don’t yet include Americans because the U.S. allows only accredited investors—generally those who have assets of more than $1 million—to buy equity in private firms. That will soon change: The Jumpstart Our Business Startups Act, signed into law last April, allows anyone to invest as much as $2,000 or 5 percent of their income or net worth, whichever is greater, in closely held ventures. The Securities and Exchange Commission is still working on rules for investor safeguards required by the act.
Change soon? Yeah right. Here's what NYT wrote on December 28, 2012, when it was clear that the SEC wouldn't meet the December 31 deadline imposed in the Act:
The Securities and Exchange Commission appears certain to miss its end-of-year deadline for issuing regulations to put the provision into effect. And with the departure of the S.E.C. chairwoman, Mary L. Schapiro, and three of her top deputies — including two who manage the offices writing the regulations — some in the nascent equity crowdfunding industry worry that it could be 2014 before their line of business becomes legal.  
The delay has frustrated many crowdfunding backers. The 270 days that Congress gave the S.E.C. to write the rules “is not a suggested timeline; it is a Congressional mandate,” said Kim Wales, an organizer at Crowdfund Intermediary Regulatory Advocates, a lobbying group formed in April to represent the new industry, in an e-mailed statement. “The S.E.C. answers to Congress, not the other way around.”
Here is the ugly proof, via Techcrunch, that shows former SEC Chair Mary Schapiro going out of her way to delay issuing SEC crowdfunding rules:
Early last year, it was revealed that former SEC chairman, Mary Schapiro, stalled the implementation of crowdfunding, as mandated by the overwhelmingly popular JOBs Act, for fear that it would harm her legacy. 
In an email to Corporation Finance Director Meredith Cross related to a last-minute lobbying effort to derail crowdfunding rules, Schapiro wrote “I don’t want to be tagged with an anti-investor legacy.” The email included the incriminating subject line, “Please don’t forward.” 
Yeah right, it would have harmed her legacy with banksters and left an anti-bankster legacy, not an anti-investor legacy. It will be fascinating to see how the bankster owned White is going to handle this situation. Her controls, the banksters, really don't want this, but those in favor of freedom and crowdfunding are very internet savvy and will put major pressure on her.

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