At the Crowdfund Global Expo in San Diego, we had the opportunity to meet members of CFIRA, the hosts of the event. Almost the entire board of CFIRA spoke at the Crowdfund Global Expo working to educate the public on the current events surrounding investment crowdfunding laws being passed under the JOBS Act.
As we continued to speak with members of the board, it became important to us to shine a light on CFIRA to help you learn about the organization that has been working with the SEC, FINRA, and federal government to establish industry standards and best practices for investment (equity) crowdfunding . Since their inception after the JOBS Act was signed in April of 2012, they have become the top advocacy group in crowdfunding under the JOBS Act.
A Quick Bit of History
In November of 2011, the house begin passing a few bills aimed at stimulating the economy which had hit major downturn in 2008, and among them was the Entrepreneur Access to Capital bill. The overwhelmingly approval of this bill led to the introduction of two bills to the senate which focused on the growing trend of raising capital through crowdfunding.
At the time, reward based platforms such as Kickstarter and Indiegogo were growing at astonishing rates. The two bills introduced to the senate sat there for a few months until House majority leader, Eric Cantor, introduced and revised a previous bill that relieved companies of certain restrictions under the Sarbanes-Oaxley Act. Cantor named this bill the Jumpstart Our Business Startups Act (JOBS Act). The bill spent the next month moving through debates and revisions before being signed into law by President Obama on April 5, 2012.
Started As Crowdfunding Professional Association (CfPA)
Now in the months preceding to the signing of the bill they were roughly 20 active members of the crowdfunding community. All crowdfunding visionaries represented future crowdfunding platforms, consulting firms, and law firms that would be play a hand in forming the new industry. It became clear that they wouldn’t be competitors for quite some time and now they needed to work together. This group formed and became known as the Crowdfunding Professional Association (CfPA).
However, as the rallies, and lobbying drew on to encourage the passage of what would eventually be known as the JOBS Act, internal struggle plagued the CfPA. One of it’s founding members, DJ Paul, characterized the the divide between the backgrounds of tech and the finance sector.
A Clash Of Industry Culture
Popular crowdfunding at the time, had spawned from the tech communities. All this crowdfunsing was mostly dominated by the reward based platforms. The two most well known platforms, Indiegogo and Kickstarter, were based in thriving tech scenes.
While the tech culture is much more familiar to a If you can think it, you can build it attitude, Paul came from the finance and securities industry which was much more familiar with the SEC and playing within the rule book. According to Paul, mismanagement and clashes between in industry philosophy led to the creation of CFIRA.
Since the separation from the CfPA, CFIRA has added a very talented team to the board all of which hold executive position on major investing platforms, consulting firms, data platforms, and a PR company with a specialty in financial services.
Moving On, CFIRA Continues to Benefit Community
Since their formation at the time of the signing of the JOBS Act, CFIRA has done an amazing job working with the SEC and FINRA to make sure the rules passed under the JOBS Act are fair and beneficial to the investment crowdfunding community. They have participated in industry specific symposium’s, hosting educational events, and working directly with the SEC.
Over the course of the formation of CFIRA, they worked with the SEC in the following:
- Proposing an initiative for an anti-fraud database
- Advocating a 21 day cooling off period that protects crowdfunders
- Urging FINRA to embrace Crowd Intelligence
- Creating a registered Portal-Check to list all intermediaries registered to conduct Crowdfunding similar to the Broker-Check system currently maintained by FINRA
- Specifying the scope of due diligence to protect both parties from fraud
- Specifying reasonable customer education requirements
- Specfying that accredited investors are not help to the same requirements as non accredited investors
Now that Title II of the JOBS Act has seen large success since going into effect in September of 2013, CFIRA is actively working with the SEC to iron out the rules for Title III. CFIRA has played a major role in the formation of this industry and it’s continued development working with the SEC, FINRA, to impacting millions of entrepreneurs and investors. They will be accepting memberships in the near future to help you become apart of “the biggest financial revolution since the great depression.” – DJ Paul
Moving forward, CrowdDistrict will working with CFIRA and Leverage PR, the leading PR firm in crowdfunding, to provide you with the latest in investment (equity) crowdfunding.