STOCK MARKET WATCH -- Thursday, 29 March 2012

[Demeter]

55. JOBS Act benefits financial criminals: Congress declares open season on small investors

http://www.marketwatch.com/story/jobs-act-benefits-financial-criminals-2012-03-29?siteid=rss&rss=1

If, as expected, the Jumpstart Our Business Startups (JOBS) Act that passed through Congress last week becomes law, the big increase in employment most likely will come in the investment scam business. Criminal minds must be working overtime now, because the new legislation — which seemingly every investor- and consumer-protection group has railed against — effectively makes it open season on small investors.

The legislation effectively allows a burgeoning phenomenon known as “crowd funding” to proceed virtually unfettered, with the idea that it will help new and small businesses raise capital effectively at a time when the financial-services industry has been tight about making loans and institutional investors have been rushing for safety.

Crowd funding — sometimes called “crowd financing” — is used to describe a group of people who network and pool money and resources together to support an effort. It really started with charitable causes, disaster relief and political campaigns, then it spread to the arts community (where the idea was to finance, say, a movie or Broadway show), and ultimately to supplying capital for small businesses and start-up companies.

It’s a particularly appealing idea in this day and age of social media, where a cool concept can spread like wildfire and generate immediate excitement...