President Obama will reportedly name former attorney general for the Southern District of New York, Mary Jo White, to the top spot at the Securities and Exchange Commission (SEC). Technology startups have been eager for the SEC to approval rules for “crowdfunding” (raising capital from family, friends, and other non-accredited investors) but the process was stalled by a mini-scandal with the former SEC boss and her subsequent departure.
As the lead prosecutor of mob boss John Gotti, White breaks tradition with predecessors as a financial outsider, perhaps making her more likely to aggressively pursue Wall Street misconduct. Unfortunately, it also means we don't know much about her views on crowdfunding.
Early last year, it was revealed that former SEC chairman, Mary Schapiro, stalled the implementation of crowdfunding, as mandated by the overwhelmingly popular JOBs Act, for fear that it would harm her legacy.
In an email to Corporation Finance Director Meredith Cross related to a last-minute lobbying effort to derail crowdfunding rules, Schapiro wrote “I don't want to be tagged with an anti-investor legacy.” The email included the incriminating subject line, “Please don't forward.” She continued: “In light of all that's been accomplished, that wouldn't be fair, but it is what will be said …”
Now that Schapiro is gone, startups might finally be able to raise capital from outside the traditional deep-pocketed circles of Silicon Valley venture capitalists and banks.
Of course, the operative word here is “may.” We'll keep readers updated as this story develops.