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?Passing the Hat?--An Investment?

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Groups of people are coming together to accomplish goals as never before, often using the Web. But as traditional a funding practice as ?passing the hat? is illegal, under Securities and Exchange Commission (SEC) rules--if the recipient makes money and wants to pay their contributors back.

So, some Netizens are getting together and passing the hat to try to get the SEC to allow passing the hat as an investment, in a crowdsourced and crowdfunded (see below) effort, with Petition for Rulemaking File No. 4-605. (The SEC can change its own investment rules, under SEC Rule of Practice 192, 17 CFR §201.192 (2010).)

The Sustainable Economies Law Center, after a suggestion from BoingBoing blog contributor Paul Spinrad, has drafted and filed a petition to the SEC, asking the SEC to change its rules and allow crowdfunded venture-capital funding.

More details are available at this BoingBoing post, or at the SEC?s website, under Petitions for Rulemaking File No. 4-605. (Comments to this petition are available online.) This petition is open for public comment. The SEC takes comments into consideration in deciding how to change its rules; if this rule would help you, as a developer or investor, please weigh in at the How to Submit Comments page at the SEC website, or see Paul Spinrad?s original BoingBoing post for instructions on how to comment.

For more information about the SEC rules that govern this issue, see the petition, File No. 4-605.

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?Crowdsourcing? is a neologism, coined, according to Wiktionary (http://en.wiktionary.org/ ) by "Wired magazine writer Jeff Howe, from crowd + sourcing, by analogy with outsourcing." Wiktionary defines it (http://en.wiktionary.org/wiki/crowdsourcing) as "delegating a task to a large diffuse group, usually without substantial monetary compensation."

?Crowdfunding? is such a ?neo? neologism that Wiktionary doesn?t define it yet. By analogy from ?crowdsourcing,? it refers to funding provided by a similar large, diffuse group.

Full post as published by novalawcity on July 08, 2010 (boomark / email).