Meanwhile, more than half of the states, tired of waiting for the SEC to act, have adopted their own versions of what is known as crowdfunding, which is largely expected to be Internet outreach to large numbers of potential investors by entrepreneurs seeking capital.
Because of SEC rules in effect under the Securities Act of 1933, the states' legislation limits fund-raising to residents in the state where the business is located.
And with the arrival of federal crowdfunding comes a growing concern that the crowdfunding laws of the various states may be rendered "impractical" since those who use the Internet or social media, the logical tools to reach a "crowd" of prospects, must ensure no one in another state can see the offering.
But despite that expectation, in the 15 months since DFI enacted the rules and the law went into effect, only two businesses have filed to raise money in this state via crowdfunding. In fact, according to DFI Director Scott Jarvis, only 100 companies around the country have used intrastate crowdfunding to raise capital.
One reason for slower-than-anticipated interest could be that the resurgent economy has made it easier to raise money through traditional funding sources, suggests Joe Wallin, a Seattle attorney with Carney Badley Spellman, who basically wrote the state legislation that was passed two years ago.
According to the SEC's directive, if someone in another state sees the information on the offering, it is no longer intrastate, which would basically nullify the fund-raising effort.
Thus there seems to be optimism that what Congress launched with the right intent, but watched while the SEC dithered for almost four years, may still produce an opportunity for entrepreneurs to create jobs rather than being jobbed by thoughtless regulations.