JOBS Act Rulemaking Comments on SEC File Number S7-11-13 Dated April 2, 2014
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This letter from the CEO of Public Startup Company addresses the constitutionality of JOBS Act revisions to securities regulation in light of the recent Supreme Court decision in McCutcheon v. FEC. The CEO argues that while reasonable limits on individual investments in a single crowdfunding campaign may be valid, aggregate limits on total investments in securities offered via crowdfunding would not be constitutionally valid based on the McCutcheon decision. The CEO provides an analogy comparing political contributions to campaign financing and startup investments to crowdfunding campaigns.
JOBS Act Rulemaking Comments on SEC File Number S7-11-13 Dated April 2, 2014
- 1. PUBLIC STARTUP COMPANY, INC. https://www.publicstartup.com 2360 Corporate Circle, Suite 400 Henderson, NV 89074-7739 April 2, 2014 To: Mary Jo White, Chair From: Jason Coombs, Co-Founder and CEO Elizabeth M. Murphy, Secretary Public Startup Company, Inc. Charles Kwon, Office of Chief Counsel, http://twitter.com/JasonCoombsCEO Division of Corporation Finance http://JOBS-ACT.com/Coombs.Jason Securities and Exchange Commission http://facebook.com/publicstartup/info 100 F Street, NE, Washington, DC 20549-1090 http://linkedin.com/in/jasoncoombs CC: rule-comments@sec.gov http://facebook.com/JasonCoombsCEO Re: File No. S7-11-13, http://www.gpo.gov/fdsys/pkg/FR-2014-01-23/pdf/2013-30508.pdf JOBS Act legislation URL http://www.gpo.gov/fdsys/pkg/BILLS-112hr3606enr/pdf/BILLS-112hr3606enr.pdf This comment addresses constitutionality of revisions to federal securities regulation pursuant to Title IV of the JOBS Act, as these revisions relate to today's Supreme Court decision in McCutcheon v. FEC. I previously urged the SEC to formally adopt “A Bill of Rights for Securities Issuers Under The JOBS Act” https://publicstartup.com/A_Bill_of_Rights_for_Securities_Issuers_Under_The_JOBS_Act.pdf I have been writing letters to the SEC since 2012 when the corrupt, criminal, outrageous action of the former Chair, Mary Schapiro, and her co-conspirators including most of the present Commissioners, first made it clear to me that the SEC was going to continue to be the problem rather than the solution. I submitted 6 comment letters previously published at http://www.sec.gov/comments/s7-11-13/s71113.shtml The Commission should be mindful of a Supreme Court decision today in McCutcheon v. FEC with regard to any “aggregate limit” for crowdfunding campaign contributions by investors. It seems consistent with the Supreme Court ruling in McCutcheon for the SEC to impose reasonable limits on investments by investors in any specific JOBS Act Title IV (or Title III) Offering during a single year. However, “aggregate limits” on investing in any particular asset class (such as unregistered securities offered publicly via crowdfunding) would not appear constitutionally-valid, if one considers a “vote” analogous to such an investment, and any “campaign” analogous to a public Offering (as illustrated below, if similar case is brought against the SEC): McCutcheon v. Federal Election Securities and Exchange Commission, April 2, 2014 http://www.supremecourt.gov/opinions/13pdf/12-536_e1pf.pdf CHIEF JUSTICE ROBERTS announced the judgment of the Court and delivered an opinion, in which JUSTICE SCALIA, JUSTICE KENNEDY, and JUSTICE ALITO join. There is no right more basic in our democracy free-market economy than the right to participate in electing our political leaders funding startups. Citizens can exercise that right in a variety of ways: They can run for office ask the public to invest in a startup themselves, vote invest, urge others to vote for invest in a particular candidate startup, volunteer to work on a crowdfunding campaign, and contribute to a candidate’s crowdfunding campaign. This case is about the last of those options. The right to participate in democracy the free market through political contributions investing is protected by the First Amendment, but that right is not absolute. Our cases have held that Congress may regulate campaign contributions investing and advertising of investments to protect against corruption fraud or the appearance of corruption abuse of public investor trust. See, e.g., Buckley v. Valeo, 424 U. S. 1, 26–27 (1976) (per curiam). At the same time, we have made clear that Congress may not regulate contributions investing simply to reduce the amount of money in politics invested in startups or provided by a class of people, or to restrict the political participation of some in order to enhance the relative influence of others.