I was honored to participate yesterday on a panel on the JOBS Act at The Future Direction of Investor Protection at The George Washington University Law School. Other members of the panel were Donald C. Langevoort (Georgetown), Steven M. Skolnick (Lowenstein Sandler LLP), Robert B. Thompson (Georgetown) and J.W. Verret (Chief Economist & Senior Counsel, House Financial Services Committee), and was moderated by Theresa Gabaldon (George Washington).
One of the important ideas to emerge from the panel is the possibility of a reform to Rule 506 that would make it easier for non-accredited investors to participate in private offerings. Currently, very few Regulation D offerings are open to non-accredited investors, in large part because such participation triggers addditional disclosure requirements under Rule 506, on which most Regulation D offerings rely.
An idea surfaced for a reform to Rule 506 that would treat non-accredited investors as accredited investors so long as the non-acccredited investors invested alongside non-affiliated accredited investors on the same terms in the same offering. This would presumably provide the non-accredited investors with the benefit of the judgment of the accredited investors, but would not trigger the requirement for a costly disclosure document under Rule 506.
I'm sure each member of the panel had different opinions about the idea, but it seems to me a much better solution to allowing non-accredited investors to access private placements than crowdfunding. The panel identified many problems with crowdfunding that will severely limit its value for investors, although opinion there was not (quite) unanimous.