Securities Crowdfunding and Investor Protection
CESifo DICE Report 2/2016
Posted: 19 Jul 2016 Last revised: 18 Aug 2016
Date Written: May 2, 2016
Crowdfunding remains a bit of an unknown in business finance. Securities crowdfunding, as a subset of that financing market, is no more familiar. Diverse investors and risks make for a complex regulatory puzzle.
Investor protection regulation has begun to develop in a path-dependent manner. Although there are some core similarities in rule types (e.g., as to offering and investment limits), there is a lot of variation beyond those fundamental similarities. Whether the crowdfunding regulations adopted in various jurisdictions adequately protect investors while, at the same time, promote capital formation through crowdfunding remains to be seen. Experience should give regulators enough information about crowdfunding investors and their risk profiles to enable a more accurate calibration of investor protection mechanisms. If crowdfunding business practices and regulations become more consistent across jurisdictions, investor protection rules may then begin to converge.
Keywords: Crowdfunding, Investor Protections, Small Business Finance, Corporate Finance
JEL Classification: D20, D24, G15, G18, G32, G38, K22, L26, L53, M13, M20, O38
Suggested Citation: Suggested Citation