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The SEC Is About To Make Crowdfunding More Expensive

Soulskill posted about 4 months ago | from the another-pot-of-honey-they-can-dip-their-fingers-in dept.

The Almighty Buck 366

PapayaSF writes "Proposed new rules require that funding portals register with the Securities and Exchange Commission and the Financial Intermediary Regulatory Authority. In addition, investors must have access to a business plan, use of proceeds, a valuation of the company, and financials, so Certified Public Accountants may be needed. The SEC estimates that for amounts under $100,000, the fees will be 12.9% to 39% of the money raised, though it may drop to under 8% for higher amounts. Is this needed regulation, or bureaucratic overreach?"

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Overreach (5, Insightful)

redmid17 (1217076) | about 4 months ago | (#45869137)

It's overreach

Re:Overreach (1)

tsprig (167046) | about 4 months ago | (#45869167)

It's regular overreach for our needed bureaucracy.

Re:Overreach (4, Funny)

Anonymous Coward | about 4 months ago | (#45869205)

Bureaucrats need jobs because their entire sense of self worth depends on being given a place to drive to and sit at.

Re:Overreach (4, Insightful)

Anonymous Coward | about 4 months ago | (#45869171)

It's overreach

Also known as "needed regulation" for a problem that does not exist.

Re:Overreach (5, Insightful)

Will.Woodhull (1038600) | about 4 months ago | (#45869401)

Also known as "needed regulation" for a problem that does not exist.

Precisely.

No mutual funds, retirement funds, or anything similar should have anything to do with crowdfunding. The SEC has no place here. Crowdfunding is similar to buying raffle tickets at a Church bazaar and the SEC has no business messing with those, either.

The SEC has more than enough to do with figuring out how to manage their direct mandate and prevent Big Finance from screwing us all over yet again with some new and clever shiny like the sub prime mortgage instruments, etc. They still need to clean their own house. And quit looking around for something to divert attention from they way that agency has managed to so fuck things up for 20 or more years.

Re:Overreach (2, Insightful)

Spy Handler (822350) | about 4 months ago | (#45869215)

It's the government's job to protect us from ourselves. Or so it thinks.

Or put another way, a regulatory agency exists to create regulations.

While I would agree that some regulations are necessary for a functional society, this ain't one of them. The people giving out money to Kickstarter and its ilk are not poor, not illiterate and they know what they're getting into. They're spending disposable income on toys and entertainment, not their rent money.

Personally I don't give money to crowfunding and my opinion is that if some scoundrel absconds with your funds, well you kinda deserve it.

Re:Overreach (5, Informative)

coolsnowmen (695297) | about 4 months ago | (#45869407)

I think you are over reacting. This basically has nothing to do with kickstarter or kickstarter like funding efforts unless they are selling parts of the company. Most kickstarters I've ever seen are selling a product (and sometimes not even that), not securities (shares of their company).

Re:Overreach (2)

gl4ss (559668) | about 4 months ago | (#45869217)

well.. in cases where it is actually pre-sales of the product, then normal sales related taxes should apply imho.

Re:Overreach (1)

Anonymous Coward | about 4 months ago | (#45869221)

It's overreach

How about a crowdfunding campaign registering at little or no cost FIRST, THEN implementing the proposed operational conditions after the fact. Based on the end results of the campaign, it can be determined if it's feasible. If it isn't, the money is returned to the investors.

Anything else is nothing more than pimp-baller-coke-snorting-give-me-your-cash crap from the SEC kicking it back to their connections.

Re:Overreach (4, Insightful)

Jah-Wren Ryel (80510) | about 4 months ago | (#45869241)

> It's overreach

I don't think so. The SEC regulates selling stock in companies and that is what they are doing here. It was less than a year ago that congress passed a law that would permit selling of shares via "crowdfunding." This is basically a way to solicit angel and first round investors. If a company wants that kind of money it seems to me that the stuff the SEC is requiring is a very reasonable bare minimum. Penny stocks are the playground of scammers, the SEC doesn't want the hype around crowdfunding to give them a new playground.

Re:Overreach (5, Informative)

Concerned Onlooker (473481) | about 4 months ago | (#45869259)

"Penny stocks are the playground of scammers..."

So is investment banking, apparently. Is this just another area the SEC can fail at?

Re:Overreach (2)

TsuruchiBrian (2731979) | about 4 months ago | (#45869359)

I wouldn't have as much of a problem with the SEC spending all this money to protect us, if they actually were protecting us from something that was a higher cost to society than the SEC.

Re:Overreach (1)

TFAFalcon (1839122) | about 4 months ago | (#45869567)

Another good thing would be if the SEC actually punished the guys who break the rules, instead of mostly just making them give back some of the money they made.

Re:Overreach (1)

RyuuzakiTetsuya (195424) | about 4 months ago | (#45869285)

No. It's probably due to people screwing each other on both ends using things other than Kickstarter or indie gogo.

They're talking about securities. So, equity, stock or whatever. Someone probably screwed an unqualified investor out of a lot of money legally and they're looking to rectify that.

Re:Overreach (1)

JockTroll (996521) | about 4 months ago | (#45869443)

No, it's the big boys coming up and saying "einsatz". If you don't know the meaning, read up Molnàr's "The Boys of Paal Street".

Re:Overreach (0)

Anonymous Coward | about 4 months ago | (#45869479)

Or not. I can easily see why the SEC (South Eastern Conference) needs a cut of ticket sales from crowd-funded football games.

sounds like! (0)

Anonymous Coward | about 4 months ago | (#45869141)

BIG BUSINESS!!!

Re:sounds like! (5, Insightful)

Tablizer (95088) | about 4 months ago | (#45869165)

Or maybe big business trying to squash competitors.

While one often imagines left-leaning socialists wanting more regulations on everything, many times such legislation is merely big companies lobbying to stifle smaller companies, or even big competitors in slightly different industry categories.

In Utah, some big companies lobbied to regulate the cosmetic industry in a way that put a lot of mom-and-pop beauty salons out of business. Thus, people would go to big-co franchises instead. (That's why Utahians are so ugly :-) .... just kiddin'

Businesses only hate regulations that hurt themselves, but love regulations that stifle competition.

Existing patent laws appear to be a form of this: they favor big patent portfolios and big lawyers, because smaller companies and individuals don't have the lobbying money behind them to make the patent rules more small-company-friendly.

Re:sounds like! (3, Interesting)

AHuxley (892839) | about 4 months ago | (#45869235)

Take some advice from US branded big business then :)
Set up a company in a more start up friendly part of the world and see how that works out in the digital age.
With todays faster broadband - art, music, design, code, languages, support and unique skills can be pulled together from around the world at lower prices.
Why not just create not the entire project in a more understand area of the world?

Re:sounds like! (5, Informative)

SuricouRaven (1897204) | about 4 months ago | (#45869319)

The US toy safety regulations are a commonly cited example. Following the scandal involving lead paint being used on toys imported from China, the US passed strict safety regulations for toys in the Consumer Product Safety Improvement Act. Well-intentioned, but they also cost a fair bit to follow - every new model of every toy needs to be sent to an independant inspector to run everything from mechanical tests to chemical analysis of the plastic. This is small change to a toy manufacturing giant, but a crippling expense to a small business. There's an exception to some of the regulations for those manufacturers who register as a 'small batch manufacturer,' but it's still more paoerwork overhead.

There's also some speculation about very small scale - there's no exception for nonprofits. If you were to knit some toys to sell at a charity event, that's now a felony - you can't see toys that havn't been subjected to the required safety testing. Up to a five year jail term. In practice regulatory generally know that this is one of the cases where actually enforcing the law would be silly, but such 'informal exemptions' are not good legal practice.

Re:sounds like! (1)

MobSwatter (2884921) | about 4 months ago | (#45869413)

Or maybe big business trying to squash competitors.

Two fold, they quash the competitor, and steal the idea instead of having to wait and have to buy it out later...

39%? Yikes! (4, Insightful)

Tablizer (95088) | about 4 months ago | (#45869145)

There should be an upper limit, perhaps around 10% of revenues.

Re: 39%? Yikes! (-1)

Anonymous Coward | about 4 months ago | (#45869163)

Or how about stop whining and you go get that 39%? Hmm? Too pussy huh? Then shut up you commie liberal bitch

Re: 39%? Yikes! (-1)

Anonymous Coward | about 4 months ago | (#45869197)

I have no idea what you are trying to say. Are you even trying to make some kind of sense?

Re:39%? Yikes! (1)

firex726 (1188453) | about 4 months ago | (#45869185)

Even at the lower rate of 13%, as it is about 10-20% of money raised falls through, and then the platform used takes around 10%. So if you raise $100k, then you might only get around $67k.

Re:39%? Yikes! (0)

Mitreya (579078) | about 4 months ago | (#45869201)

So if you raise $100k, then you might only get around $67k.

And that is going to be taxable income, too. So good luck getting even half of the funds.

Re:39%? Yikes! (0)

Anonymous Coward | about 4 months ago | (#45869315)

I'm no tax expert, but wouldn't it rather be revenue and you'd only pay tax on whatever profits you make from your crowdfuned project?

Re:39%? Yikes! (1)

l0n3s0m3phr34k (2613107) | about 4 months ago | (#45869389)

Maybe. It depends on how the business receiving the funds is structured. For a sole proprietorship, any money that comes into the business is considered profit, and you and the business are basically the same entity tax-wise. For an LLC, any money left over at the end of the year is considered "profit" and taxed for each partner on an individual level. For a corp (and there are two common types, C and S) then taxes are on net profits, usually on a quarterly or yearly basis. This is just the "income" part, not even touching the sales tax part...which if they are selling an actual physical product is a consideration, as is the "use tax"...and I'm sure there are hundreds of different rulings and other laws there...thus the need for a CPA.

The main idea behind kickstarter et al was to avoid the massive amount of paperwork involved. The government hates people avoiding paperwork, so in the end this idea will probably end up being more complicated than normal investments.

Re:39%? Yikes! (0)

AuMatar (183847) | about 4 months ago | (#45869447)

If the company is using the crowdfunding as a presale platform (which 99% of them are), they absolutely need to count that as revenue. Its a sale. Of course income tax is only payed on net, not gross.

If they're using it as a way to sell to investors, then that isn't income, its a PO. That isn't taxable.

So basically, they'll have to follow the same rules as any brick and mortar business. Which seems absolutely right to me.

Re:39%? Yikes! (2)

zidium (2550286) | about 4 months ago | (#45869603)

The SEC is only involved in *publicly traded* companies, so I don't see how kickstarter qualifies, UNLESS they're registered as S-Corps, which would be really really stupid, as they only allow 100 max investors.

Re:39%? Yikes! (3, Informative)

Nikker (749551) | about 4 months ago | (#45869585)

The summary is misleading. The rates proposed are 7-12% for all values 100K and 500K. As per TFA.

So the solution (4, Insightful)

DiSKiLLeR (17651) | about 4 months ago | (#45869147)

So the solution is to just use croudsourcing outside of the US? If you want to start a croudsourced business, move to Canada or elsewhere in the world?

You have money (2, Insightful)

Laxori666 (748529) | about 4 months ago | (#45869149)

They want it

They will get it

Re:You have money (1)

epine (68316) | about 4 months ago | (#45869231)

They want it

They will get it

Cynicism is an input as well as an output. Caveat inputer.

Re:You have money (0, Interesting)

Anonymous Coward | about 4 months ago | (#45869233)

The solution is simple: don't have money.

Re:You have money (1)

BringsApples (3418089) | about 4 months ago | (#45869481)

They don't want money. Money is for poor people (the masses). Nah, what they have to do is keep the debt-to-dollar ratio at a regular. Because to "them" money is for you, but our debt is for them. The elite don't trade 'money' with each other, they trade 'our debt to them' with each other. The only real currency is 'life time', and they know that.

That's why we can't have nice things. (2, Insightful)

Anonymous Coward | about 4 months ago | (#45869151)

And what will we be getting in return for their wise and valuable oversight?

Re:That's why we can't have nice things. (5, Informative)

phantomfive (622387) | about 4 months ago | (#45869329)

And what will we be getting in return for their wise and valuable oversight?

You will get to know how much money is being brought in, and how much is being spent. If that's worth it, I don't know, but that's the answer to your question.

Thanks Government (3, Insightful)

Anonymous Coward | about 4 months ago | (#45869153)

Fuck. If a company can put all of that together, they probably don't need crowdfunding in the first place. That's the ENTIRE POINT of having kickstarter in the first place! For ideas by small groups or single people who have nothing but a good idea. Everyone donating already understands the risk.

Re:Thanks Government (5, Informative)

Anonymous Coward | about 4 months ago | (#45869183)

This doesn't effect Kickstarter. The SEC only cares about crowd funded securities. I don't know of any kickstarter campaigns that gave stock as a reward.

Re:Thanks Government (1)

mark-t (151149) | about 4 months ago | (#45869273)

Where do you see that in the article?

Re:Thanks Government (4, Funny)

Anonymous Coward | about 4 months ago | (#45869393)

The first line of the "Background" section.

FFS. does anyone read the article anymore?

Re:Thanks Government (5, Informative)

Anonymous Coward | about 4 months ago | (#45869435)

Where do you see that in the article?

Paragraph 3, sentence 1: "The legislation requires that the selling of crowdfund securities take place on registered websites" (emphasis mine).

Re:Thanks Government (5, Insightful)

Jah-Wren Ryel (80510) | about 4 months ago | (#45869199)

If a company can put all of that together, they probably don't need crowdfunding in the first place. That's the ENTIRE POINT of having kickstarter in the first place!

This has nothing to do with Kickstarter. This is about selling SHARES in these companies, not about prepaying for potential products. I'm no expert, but best as I can tell this rules will have zero effect on crowd-funding as sites like kickstarter and indiegogo have been doing it.

Re:Thanks Government (-1)

Anonymous Coward | about 4 months ago | (#45869203)

looks like a cash grab from over here, so they get their piece of the pie.

Re:Thanks Government (0)

Anonymous Coward | about 4 months ago | (#45869223)

As stupid as more wasteful bureaucratic regulation would be, I don't see why this would apply to sites like Kickstarter. I've never seen a Kickstarter project that promises equity or securities to donors. Is that even allowed on Kickstarter?

Re: Thanks Government (1)

Anonymous Coward | about 4 months ago | (#45869487)

Everyone already understands the risk

Small time investors felt the same way before the SEC, and I doubt that's true in either case.
 
Personally I invested to have an open source portable gaming system made, much like Kickstarter but IIRC this story predates such sites. The community was great, developers reputable, and the process was fairly open. After three years of my device being two months away, I cancelled my order and got my money back (well about half, due to the developers changing currencies back and forth unnecessarily and at inopportune times). The project was legit and did ship, but had I seen a business plan I'd (hopefully) have realized they were engineers and programmers, not businessmen, and were biting off more than they could chew. Technically I preordered a product, but there's also an investment component with the time-value of money.

Perhaps not such a big deal (5, Insightful)

beernutmark (1274132) | about 4 months ago | (#45869189)

Having not read the actual legislation, the following quote from the article seems quite important: "The legislation requires that the selling of crowdfund securities take place on registered websites."

Notice the phase "selling of crowdfund securities." I think that most crowd funding doesn't involve the sale of securites and in fact most are just clever ways of pre-selling merchandise not yet made without having to give away any equity at all.

Although I could be talking complete nonsense.

Re:Perhaps not such a big deal (4, Informative)

phantomfive (622387) | about 4 months ago | (#45869265)

Yeah, by my reading, this is actually an improvement over the situation currently.

Right now, if you want to crowdfund something and give the funders stock, you can't do it. After this change, you will be able to (but if you aren't giving stock, you can do what you were doing before).

What is it? (0)

Ralph Spoilsport (673134) | about 4 months ago | (#45869191)

The SEC estimates that for amounts under $100,000, the fees will be 12.9% to 39% of the money raised, though it may drop to under 8% for higher amounts. Is this needed regulation, or bureaucratic overreach?"

No, it's utter fucking horseshit.

I think this isn't talking about Kickstarter (5, Insightful)

Dachannien (617929) | about 4 months ago | (#45869195)

I'm not completely sure, but I think the SEC is talking about situations where a company avoids the traditional IPO process and instead "crowdfunds" the sale of securities in their company [bankrate.com] (either debt or equity). Kickstarter is generally different, because the return on "investment" is in the form of a set non-monetary reward that is more similar to a purchase than an investment.

What is needed, though, is some clarity in the rulemaking process to ensure that Kickstarter and other similar sites can feel comfortable that they are not at risk of being caught up in this net.

Re:I think this isn't talking about Kickstarter (4, Informative)

RyuuzakiTetsuya (195424) | about 4 months ago | (#45869249)

Heaven forbid anyone read the actual source material.

Looking at just the article, it's hard to imagine this applies to people kicking in 20 bucks to get access to some doodad. Looks like it's more geared towards people raising lots of money in exchange for equity of some kind. Hence, security. Think the film UHF, less Pebble. Also given they are talking about income slices between 100k, 500k, and a million dollars.

Re:I think this isn't talking about Kickstarter (1)

Nikker (749551) | about 4 months ago | (#45869611)

What doesn't make sense about your theory is that the thresholds are so low. If this rule/law was to govern all ranges of equity then why stop the scale at $1M? That's just a drop in the bucket when you consider the $100b stakes spread regularly throughout the country.

Which makes sense since that's what the SEC does (4, Informative)

Sycraft-fu (314770) | about 4 months ago | (#45869269)

The "S" in SEC stands for Securities. It is their job to regulate that kind of thing.

As you say, Kickstarter is different. Not only are you not getting any equity in the company, you aren't getting any financial stake in the project or anything. It is an investment for creative return, not financial, and thus not something that would be covered.

You need to pay income tax on Kickstarter funds, of course, but that's all. They aren't an investment as far as the SEC is concerned.

Re:I think this isn't talking about Kickstarter (0)

Anonymous Coward | about 4 months ago | (#45869331)

>Kickstarter is generally different, because the return on "investment" is in the form of a set non-monetary reward that is more similar to a purchase than an investment.

No. Kickstarter takes pains to make clear that kickstarting something is an investment (though without securities) and you are not guaranteed anything in return. It is in no way, shape, or form, a purchase.

wrong focus (2)

Gravis Zero (934156) | about 4 months ago | (#45869209)

instead of going after crowdfunding efforts, how about they go back to preventing Wall Street and banks from causing another global collapse? HFT is much more of threat and far more harmful than any crowdfunding effort.

priorities, motherfuckers, fix them.

Re:wrong focus (2)

RyuuzakiTetsuya (195424) | about 4 months ago | (#45869423)

They're trying.

The Volcker Rule just passed a huge hurdle in the courts. However, reenacting the whole swatch of protections is going to take an act of Congress to reenact the Glass-Steagal act.

HFT just might not be a priority though.

Economy of scale strikes again (0)

Anonymous Coward | about 4 months ago | (#45869211)

Something is broken when the costs of closing a loan impose a 39% fee. That's all startup money usually is, a loan, right? Angels are giving you loans at high rates of interest to justify the risk, but there isn't a huge closing cost like that. Somebody, somewhere is "doing it wrong" by using some kind of funding process with a really high fixed cost.

Re:Economy of scale strikes again (2)

beernutmark (1274132) | about 4 months ago | (#45869293)

Nope, not a loan. Angels are getting in as owners early in the game and hoping for an IPO or acquisition to get paid out. They incur great risk since their stake is often highly diluted after additional fund raising efforts. That is why the fees are so high. http://en.wikipedia.org/wiki/Angel_investor [wikipedia.org]

This is investment, not "donating". (1)

Animats (122034) | about 4 months ago | (#45869213)

This is the next step up from the "gimme, gimme" level of Kickstarter. You can still do Kickstarter projects, but now there's a tier above that, for when you need $1M or so.

It's overreach (1)

Mr. Freeman (933986) | about 4 months ago | (#45869225)

Interesting. I'd normally be all for this, there are way to many kickstarter campaigns that consist of "I have an idea for something, I need an amount of money determined by pulling a number out of my ass, I won't offer you any return on your investment, I might not even come through with the project, give me your money!"

On the other hand, there's no fraud here, no one on kickstarter is claiming to know what they're doing. Also, the job of the SEC is to prevent financial fraud, not to prevent fools from being parted with their money. If idiots want to throw their money at stupid things on the internet, let them to it without silly extra taxes!

Re:It's overreach (1)

Anonymous Coward | about 4 months ago | (#45869291)

They are specifically talking about selling securities. The type of kickstarter efforts that you mention are not selling securities and thus are unrelated. The confusion comes from the title calling this a regulation of crowdfunding in general, instead of just securities.

Capitalism At Work (0)

Anonymous Coward | about 4 months ago | (#45869239)

Paid-for government tool of big money crushing little money.

If the 1% didn't have a government tool to do it en masse, they'd just send lawyers after individuals.

Capitalism, fuck yeah!

Re:Capitalism At Work (1)

mfwitten (1906728) | about 4 months ago | (#45869257)

Capitalism is predicated on voluntary exchange.

Um... How is this "capitalism" again?

Re:Capitalism At Work (0)

Anonymous Coward | about 4 months ago | (#45869271)

You have been volunteered.

Re:Capitalism At Work (1)

mfwitten (1906728) | about 4 months ago | (#45869295)

There's a reason that George Orwell's 1984 prominently features the redefinition of language.

Probably needed (1)

Black Parrot (19622) | about 4 months ago | (#45869339)

I don't know what the track record w.r.t. scams is so far, but it's just a matter of time until the con artists start trying to take the money and run.

Where there's money, there's crooks.

Misleading summary (5, Informative)

FreelanceWizard (889712) | about 4 months ago | (#45869353)

If you actually bother to read the Federal Register text [federalregister.gov] , you can see in the second paragraph of the introduction that the JOBS Act, and this subsequent regulatory structure, only applies to crowdfunding where the reward is a security. It specifically explains that this is different from the current model of crowdfunding in the U.S., where the donors receive some "token of value" related to the project, not a share of future financial returns. The SEC isn't trying to regulate the current system, but is trying (as directed by that law) to allow crowdfunding where the donor award is a security; the current regulatory structure, based on the Securities Act, largely makes this sort of model impossible due to the various requirements of public offerings.

So, there's nothing to get up in arms about. This is just a move by the SEC to allow something that isn't currently permissible under U.S. law, not an attempt to "tax Kickstarter" or "regulate Indiegogo" or whatever other nonsense people claim.

Re:Misleading summary (4, Insightful)

mysidia (191772) | about 4 months ago | (#45869395)

But is trying (as directed by that law) to allow crowdfunding where the donor award is a security; the current regulatory structure, based on the Securities Act, largely makes this sort of model impossible due to the various requirements of public offerings.

If so... it's an improvement.... but the requirement that the entrepreneur front, essentially 39% of the funds, to raise less than $100K.. would appear to be unduly burdensome. The requirement for a CPA audit would also appear to be unduly burdensome.

The person raising this money, should have a less-expensive option: that does not require losing a significant amount of their funding. And they should have an option of disclosing that no audit has been or will be performed.

Whether no audit makes the offer unsatisfactory or not, should be the decision of potential investors, to be made based on their careful judgement in selecting potential investments, not the federal government.

mod parent up! (0)

Anonymous Coward | about 4 months ago | (#45869399)

Submitter is a doofus.

thanks again DICE for inflammatory comment-bait articles.

Its protecting legacy business (0)

Anonymous Coward | about 4 months ago | (#45869365)

This all about creating an artificial barrier to entry again. Its about eliminating competition and trying to force idea-makers to go back to the big companies to develop their ideas and get ripped off just like in the 'good ol days'.

This will not protect "investors" as this is not traditional investing. There are no shares, no control or interest in the business, only the product.

Its about sucking cash out of startups.
Its about making it cost too much to do yourself.
Its about keeping the peons in their place.

The morons aat the SEC still cannot figure out how to define cryptocurrencies or virtual currencies, valuation of virtual assets, etc. But they think they know how crowdfunding should be regulated?

Mother Fuckers. (1)

jcr (53032) | about 4 months ago | (#45869381)

Crowdfunding exists in the first place because the SEC fucked up the equity markets to the point where it makes no sense at all to issue shares to the public unless you can raise at least $10M.

It's time to invent a bitcoin-based, anonymous way to sell equity.

-jcr

CONSTRUCTIVE BAN (1)

mysidia (191772) | about 4 months ago | (#45869383)

By definition... funding through such sites as Kickstarter --- is not an investment. There is no equity. There is a small reward.

True investments involve equity.

Nobody in their right mind would go to crowdfunding, if the person has to front want amounts to 39% of the funds they might raise (if successful). Even 5% is unduly burdensome.

The SEC's proposed regulation amounts TO A CONSTRUCTIVE BAN on crowdfunding.

The proposed regulation incurs costs that are so UNDULY CRIPPLING upon entrepreneurial activity; that the bulk of it would be SUPPRESSED completely, and NOT ON MERIT.

Misleading, Wrong kind of Crowdfunding (4, Informative)

Anonymous Coward | about 4 months ago | (#45869385)

This is NOT about Kickstarter and other crowdfunding project sources. This is about INVESTMENT CROWDFUNDING, which is very different and yes is regulated.

Kickstarter etc typs Crowdfunding: You give money and get a product in return, or whatever was offered at your level of funding you gave.

Investment Crowdfunding: offering an actual return on investment in exchange for funding, such as shares in the company, a portion of the profits, etc. which are things that do fall under the normal purview of the SEC.

Way to not do your homework submitter. Nothing to see here folks, move along.

crowd funding leaves US jurisdictions (1)

orange (12033) | about 4 months ago | (#45869409)

What the subject says.
Seriously... this is like a very mobile activity... if the US doesn't want these services, we'll take 'em...

Bureaucratic overreach? (1)

pablo_max (626328) | about 4 months ago | (#45869411)

No, it's not bureaucratic overreach.

Think about what kickstarter allows a normal person to do. If you have a great idea, or even a not so great, but highly marketable idea, it allows you to go outside of the established funding and control models which have been the norm for decades.
Ultimately, the current model ensures that the establishment is in control of your idea and your future. Unless you already had money of course, in which case you can avoid investors.
For the regulators, and the monetary elite who control them, this challenge cannot go unmet.
So no, it is not about overreach, it is about the same thing most laws towards the little man are, it's about maintaining and extending control.

It's time to wake up America. I dare say it is almost too late to change things.

Re:Bureaucratic overreach? (0)

Anonymous Coward | about 4 months ago | (#45869429)

It's time to wake up America. I dare say it is almost too late to change things.

Americans voted for 16 years of Barak Bush. It's too late for change.

Appropriate for large $ funding efforts (1)

patrixmyth (167599) | about 4 months ago | (#45869439)

This a result of the increasing size of the asks from crowdsourcing. I hope the outcome is that crowdsourcing regulations define a reasonable 'small venture' definition, and put the focus back on funding individual ideas rather than whole start-ups. In my opinion, Kickstarter is not the right place to raise millions of dollars. Managing a multi-million dollar venture does require overhead and proper accounting, which these proposed regulations acknowledge. Most of us just don't have to deal with it, so we trivialize its importance.

Necessary ... (1)

garry_g (106621) | about 4 months ago | (#45869499)

Sure, you have to protect big companies from those pesky garage developers threatening their income by developing innovative, affordable new stuff ...

enjoy (0)

Anonymous Coward | about 4 months ago | (#45869501)

your 'hope and change' - LOL!

Re:enjoy (0)

Anonymous Coward | about 4 months ago | (#45869503)

Got any spare hope, man?

Too damn funny (1)

Adult film producer (866485) | about 4 months ago | (#45869505)

For all of the crimes the SEC has been oblivious to for the last two decades, and they are numerous, and they want to regular crowdfunding? Tsk, Tsk Might be an interestin endeavor when they're not surfing porn on the job. But are they that bored? Or justing waiting out their 3 year stints when they grab a hot job on wall street..... tsk tsk

Government & Stealth Malware (-1)

Anonymous Coward | about 4 months ago | (#45869513)

Nobody Seems To Notice and Nobody Seems To Care - Government & Stealth Malware

##

In Response To Slashdot Article: Former Pentagon Analyst: China Has Backdoors To 80% of Telecoms

(The reader should know this article was written and distributed prior to the "badBIOS" revelations.)

How many rootkits does the US[2] use officially or unofficially?

How much of the free but proprietary software in the US spies on you?

Which software would that be?

Visit any of the top freeware sites in the US, count the number of thousands or millions of downloads of free but proprietary software, much of it works, again on a proprietary Operating System, with files stored or in transit.

How many free but proprietary programs have you downloaded and scanned entire hard drives, flash drives, and other media? Do you realize you are giving these types of proprietary programs complete access to all of your computer's files on the basis of faith alone?

If you are an atheist, the comparison is that you believe in code you cannot see to detect and contain malware on the basis of faith! So you do believe in something invisible to you, don't you?

I'm now going to touch on a subject most anti-malware, commercial or free, developers will DELETE on most of their forums or mailing lists:

APT malware infecting and remaining in BIOS, on PCI and AGP devices, in firmware, your router (many routers are forced to place backdoors in their firmware for their government) your NIC, and many other devices.

Where are the commercial or free anti-malware organizations and individual's products which hash and compare in the cloud and scan for malware for these vectors? If you post on mailing lists or forums of most anti-malware organizations about this threat, one of the following actions will apply: your post will be deleted and/or moved to a hard to find or 'deleted/junk posts' forum section, someone or a team of individuals will mock you in various forms 'tin foil hat', 'conspiracy nut', and my favorite, 'where is the proof of these infections?' One only needs to search Google for these threats and they will open your malware world view to a much larger arena of malware on devices not scanned/supported by the scanners from these freeware sites. This point assumed you're using the proprietary Microsoft Windows OS. Now, let's move on to Linux.

The rootkit scanners for Linux are few and poor. If you're lucky, you'll know how to use chkrootkit (but you can use strings and other tools for analysis) and show the strings of binaries on your installation, but the results are dependent on your capability of deciphering the output and performing further analysis with various tools or in an environment such as Remnux Linux. None of these free scanners scan the earlier mentioned areas of your PC, either! Nor do they detect many of the hundreds of trojans and rootkits easily available on popular websites and the dark/deep web.

Compromised defenders of Linux will look down their nose at you (unless they are into reverse engineering malware/bad binaries, Google for this and Linux and begin a valuable education!) and respond with a similar tone, if they don't call you a noob or point to verifying/downloading packages in a signed repo/original/secure source or checking hashes, they will jump to conspiracy type labels, ignore you, lock and/or shuffle the thread, or otherwise lead you astray from learning how to examine bad binaries. The world of Linux is funny in this way, and I've been a part of it for many years. The majority of Linux users, like the Windows users, will go out of their way to lead you and say anything other than pointing you to information readily available on detailed binary file analysis.

Don't let them get you down, the information is plenty and out there, some from some well known publishers of Linux/Unix books. Search, learn, and share the information on detecting and picking through bad binaries. But this still will not touch the void of the APT malware described above which will survive any wipe of r/w media. I'm convinced, on both *nix and Windows, these pieces of APT malware are government in origin. Maybe not from the US, but most of the 'curious' malware I've come across in poisoned binaries, were written by someone with a good knowledge in English, some, I found, functioned similar to the now well known Flame malware. From my experience, either many forum/mailing list mods and malware developers/defenders are 'on the take', compromised themselves, and/or working for a government entity.

Search enough, and you'll arrive at some lone individuals who cry out their system is compromised and nothing in their attempts can shake it of some 'strange infection'. These posts receive the same behavior as I said above, but often they are lone posts which receive no answer at all, AT ALL! While other posts are quickly and kindly replied to and the 'strange infection' posts are left to age and end up in a lost pile of old threads.

If you're persistent, the usual challenge is to, "prove it or STFU" and if the thread is not attacked or locked/shuffled and you're lucky to reference some actual data, they will usually attack or ridicule you and further drive the discussion away from actual proof of APT infections.

The market is ripe for an ambitious company or individual to begin demanding companies and organizations who release firmware and design hardware to release signed and hashed packages and pour this information into the cloud, so everyone's BIOS is checked, all firmware on routers, NICs, and other devices are checked, and malware identified and knowledge reported and shared openly.

But even this will do nothing to stop backdoored firmware (often on commercial routers and other networked devices of real importance for government use - which again opens the possibility of hackers discovering these backdoors) people continue to use instead of refusing to buy hardware with proprietary firmware/software.

Many people will say, "the only safe computer is the one disconnected from any network, wireless, wired, LAN, internet, intranet" but I have seen and you can search yourself for and read about satellite, RF, temperature, TEMPEST (is it illegal in your part of the world to SHIELD your system against some of these APT attacks, especially TEMPEST? And no, it's not simply a CRT issue), power line and many other attacks which can and do strike computers which have no active network connection, some which have never had any network connection. Some individuals have complained they receive APT attacks throughout their disconnected systems and they are ridiculed and labeled as a nutter. The information exists, some people have gone so far as to scream from the rooftops online about it, but they are nutters who must have some serious problems and this technology with our systems could not be possible.

I believe most modern computer hardware is more powerful than many of us imagine, and a lot of these systems swept from above via satellite and other attacks. Some exploits take advantage of packet radio and some of your proprietary hardware. Some exploits piggyback and unless you really know what you're doing, and even then... you won't notice it.

Back to the Windows users, a lot of them will dismiss any strange activity to, "that's just Windows!" and ignore it or format again and again only to see the same APT infected activity continue. Using older versions of sysinternals, I've observed very bizarre behavior on a few non networked systems, a mysterious chat program running which doesn't exist on the system, all communication methods monitored (bluetooth, your hard/software modems, and more), disk mirroring software running[1], scans running on different but specific file types, command line versions of popular Windows freeware installed on the system rather than the use of the graphical component, and more.

[1] In one anonymous post on pastebin, claiming to be from an intel org, it blasted the group Anonymous, with a bunch of threats and information, including that their systems are all mirrored in some remote location anyway.

[2] Or other government, US used in this case due to the article source and speculation vs. China. This is not to defend China, which is one messed up hell hole on several levels and we all need to push for human rights and freedom for China's people. For other, freer countries, however, the concentration camps exist but you would not notice them, they originate from media, mostly your TV, and you don't even know it. As George Carlin railed about "Our Owners", "nobody seems to notice and nobody seems to care".

[3] http://www.stallman.org/ [stallman.org]

Try this yourself on a wide variety of internet forums and mailing lists, push for malware scanners to scan more than files, but firmware/BIOS. See what happens, I can guarantee it won't be pleasant, especially with APT cases.

So scan away, or blissfully ignore it, but we need more people like RMS[3] in the world. Such individuals tend to be eccentric but their words ring true and clear about electronics and freedom.

I believe we're mostly pwned, whether we would like to admit it or not, blind and pwned, yet fiercely holding to misinformation, often due to lack of self discovery and education, and "nobody seems to notice and nobody seems to care".

##

Schneier has covered it before: power line fluctuations (differences on the wire in keys pressed).

There's thermal attacks against cpus and temp, also:

ENF (google it)

A treat (ENF Collector in Java):

sourceforge dot net fwdslash projects fwdslash nfienfcollector

No single antimalware scanner exists which offers the ability to scan (mostly proprietary) firmware on AGP/PCI devices (sound cards, graphics cards, usb novelty devices excluding thumb drives), BIOS/CMOS.

If you boot into ultimate boot cd you can use an archane text interface to dump BIOS/CMOS and examine/checksum.

The real attacks which survive disk formats and wipes target your PCI devices and any firmware which may be altered/overwritten with something special. It is not enough to scan your hard drive(s) and thumb drives, the real dangers with teeth infect your hardware devices.

When is the last time you:

Audited your sound card for malware?
Audited your graphics card for malware?
Audited your network card for malware?

Google for:

* AGP and PCI rootkit(s)
* Network card rootkit(s)
* BIOS/CMOS rootkit(s)

Our modern PC hardware is capable of much more than many can imagine.

Do you:

        Know your router's firmware may easily be replaced on a hacker's whim?
        Shield all cables against leakage and attacks
        Still use an old CRT monitor and beg for TEMPEST attacks?
        Use TEMPEST resistant fonts in all of your applications including your OS?
        Know whether or not your wired keyboard has keypresses encrypted as they pass to your PC from the keyboard?
        Use your PC on the grid and expose yourself to possible keypress attacks?
        Know your network card is VERY exploitable when plugged into the net and attacked by a hard core blackhat or any vicious geek with the know how?
        Sarch out informative papers on these subjects and educate your friends and family about these attacks?
        Contact antimalware companies and urge them to protect against many or all these attacks?

Do you trust your neighbors? Are they all really stupid when it comes to computing or is there a geek or two without a conscience looking to exploit these areas?

The overlooked threat are the potential civilian rogues stationed around you, especially in large apartment blocks who feed on unsecured wifi to do their dirty work.

With the recent news of Russian spies, whether or not this news was real or a psyop, educate yourself on the present threats which all antimalware scanners fail to protect against and remove any smug mask you may wear, be it Linux or OpenBSD, or the proprietary Windows and Mac OS you feel are properly secured and not vulnerable to any outside attacks because you either don't need an antivirus scanner (all are inept to serious attacks) or use one or several (many being proprietary mystery machines sending data to and from your machine for many reasons, one is to share your information with a group or set database to help aid in threats), the threats often come in mysterious ways.

Maybe the ancients had it right: stone tablets and their own unique language(s) rooted in symbolism.

#

I'm more concerned about new rootkits which target PCI devices, such as the graphics card and the optical drives, also, BIOS. Where are the malware scanners which scan PCI devices and BIOS for mismatches? All firmware, BIOS and on PCI devices should be checksummed and saved to match with others in the cloud, and archived when the computer is first used, backing up signed firmware.

When do you recall seeing signed router firmware upgrades with any type of checksum to check against? Same for PCI devices and optical drives and BIOS.

Some have begun with BIOS security:

http://www.biosbits.org/ [biosbits.org]

Some BIOS has write protection in its configuration, a lot of newer computers don't.

#

"Disconnect your PC from the internet and don't add anything you didn't create yourself. It worked for the NOC list machine in Mission Impossible"

The room/structure was likely heavily shielded, whereas most civvies don't shield their house and computer rooms. There is more than meets the eye to modern hardware.

Google:

subversion hack:
tagmeme(dot)com/subhack/
(This domain expired and has been replaced by different content. Please visit Archive.org - The Wayback Machine and dig for previous versions of original content)

network card rootkits and trojans
pci rootkits
packet radio
xmit "fm fingerprinting" software
"specific emitter identification"
forums(dot)qrz(dot)com

how many malware scanners scan bios/cmos and pci/agp cards for malware? zero, even the rootkit scanners. have you checksummed/dumped your bios/cmos and firmware for all your pci/agp devices and usb devices, esp vanity usb devices in and outside the realm of common usb devices (thumbdrives, external hdds, printers),

Unless your computer room is shielded properly, the computers may still be attacked and used, I've personally inspected computers with no network connection running mysterious code in the background which task manager for windows and the eqiv for *nix does not find, and this didn't find it all.

Inspect your windows boot partition in *nix with hexdump and look for proxy packages mentioned along with command line burning programs and other oddities. Computers are more vulnerable than most would expect.

You can bet all of the malware scanners today, unless they are developed by some lone indy coder in a remote country, employ whitelisting of certain malware and none of them scan HARDWARE devices apart from the common usb devices.

Your network cards, sound cards, cd/dvd drives, graphics cards, all are capable of carrying malware to survive disk formatting/wiping.

Boot from a Linux live cd and use hexdump to examine your windows (and *nix) boot sectors to potentially discover interesting modifications by an unknown party.

#
eof

OpenBSD + Truecrypt + Rip Anywhere Mp3 player (-1)

Anonymous Coward | about 4 months ago | (#45869517)

Give me an MP3 player which has the following features:

1. OpenBSD
2. TrueCrypt - choice of encrypting all of device with 1st run and in settings
3. Rip from any device - an extension to the device (like the front part of ST:TNG ship's dish which separates for example) which allows CDs to be inserted and ripped on the fly without a computer connection, and the ability to plug into any electronic device which has the ability to contain audio files, scan for, and rip any audio files - all with the option to convert them to a format of your choosing
4. Complete support of as many audio/image/video codecs as possible.
5. Nothing about the device should be proprietary, neither hardware or software.

Before you say, "Why would you want to use a device with the MP3 format?" As #4 points out, and you should really know unless you're trolling, if you look at all of the MP3 players currently for sale, most support many audio, image (JPG and more) and sometimes several video formats.

'Anti-Propaganda' Ban Repealed (0)

Anonymous Coward | about 4 months ago | (#45869519)

'Anti-Propaganda' Ban Repealed, Freeing State Dept. To Direct Its Broadcasting Arm At American Citizens

https://www.techdirt.com/articles/20130715/11210223804/anti-propaganda-ban-repealed-freeing-state-dept-to-direct-its-broadcasting-arm-american-citizens.shtml [techdirt.com]

      For decades, a so-called anti-propaganda law prevented the U.S. government's mammoth broadcasting arm from delivering programming to American audiences. But on July 2, that came silently to an end with the implementation of a new reform passed in January. The result: an unleashing of thousands of hours per week of government-funded radio and TV programs for domestic U.S. consumption in a reform initially criticized as a green light for U.S. domestic propaganda efforts.

This isn't about Kickstarter (3, Interesting)

VortexCortex (1117377) | about 4 months ago | (#45869529)

This is about selling shares: Crowd-sourced investing.

However, this sort of thing may come to other types of crowd funding.

I'm not sure what the answer will be if they require you to already have a business setup to do a Kickstarter. Business registration, incorporation, trademark registry, etc. is whole reason I'd even do a Kickstarter in the first place.

Perhaps we'll start to see 501(c)3 businesses that you can donate towards, who divide the money amongst projects? It would then be basically the same as kickstarter, except you don't get your pledge back if the project doesn't meet its goal -- You'd have a credit to apply it to another project instead.

What we really need is to put starving artists on the endangered species list, or maybe start a fake Fascist Hate Group that wears plaid Hoods and hates art. Then we can get some anti-discrimination laws for artists, as well as artist-shelters just for the down and out and artistically gifted. Anyone who says their art stinks can be accused as being an art-hater. There could even be 12 step self help programs for victims of artistic abuse. We could get even get funds to research cures for the artistically impaired. Those Kickstarter people are thinking small, if the government is getting involved, we need to play the government's game: Scaremongering to protect women and children's art from the evil plaid philistines.

It's a symptom (1)

eclectro (227083) | about 4 months ago | (#45869553)

The problem is that the SEC is truly powerless against the big bank wall street criminals, who they don't want to prosecute anyway to protect their jobs. So in order to justify their existence and feel special they have to clamp down on the small fry.

please take down this thread - it's misleading (5, Informative)

jinchoung (629691) | about 4 months ago | (#45869571)

not about crowdfunding as we know it AT ALL.

it's about different kind of crowd funding where you're participating in shares.

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