Over at The Federalist, I write about how the SEC is subverting perhaps the only piece of pro-market legislation passed during the Obama administration in the so-called “crowdfunding” component of the JOBS Act.

This bill was supposed to democratize startup funding by allowing you and I to invest in the next Uber. Instead, in its implementation of the law, the SEC is completely undermining that aim and discouraging companies from availing themselves of crowdfunded equity altogether.

Here is a taste of the piece:

Market participants in crowdfunding would invest in companies with varying levels of disclosure on varying terms based upon risk-reward payoffs they deem appropriate. In fact, while startups are loathe to provide detailed information on their operations, some companies would voluntarily provide more robust disclosures to entice greater investment on more company-friendly terms, thereby creating a potential race to the top without government coercion.

Moreover, market participants are perfectly capable of determining for themselves how much money they should invest in speculative startup ventures. Americans are free to spend as much as we want on everything from doughnuts to liquor and lottery tickets. Investing in startups may provide only marginally better odds than the latter; at the very least it has the upside of leaving us thinner and sober. Why should government leave us free to choose on how we spend on some things, but not others?

Read the whole thing here.

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