[Excerpt] "Is small better than large? When it comes to normative business law policy, many seem to think so. Many scholars attribute the 2007–08 financial crisis to mis-regulation of large banks. Many others attribute the subsequent economic recovery to jobs created by small businesses. While the “99%” protested big banks on Wall Street, the “Startup America” grassroots campaign for small business garnered political support for corporate-finance legislation. Within a two-year period, Congress passed the JOBS Act—which tripled private company shareholder limits, authorized federal equity crowdfunding, and created the “mini-IPO” Regulation A+— and the Dodd-Frank Act—which seeks to end “too big to fail” by imposing a multitude of requirements on large firms.6 In other words, policymakers seem to be trying to encourage the smallest firms while discouraging the biggest ones. But this policy decision seems to ignore the fact that all large firms were once startups that have elected to “go public” because the benefits of being public outweighed the costs of public-company regulations. The nature of corporate and securities regulation forces startups to stay small and private in order to avoid onerous public-company regulations, which actually limits the government’s ability to protect investors."
Minnesota Law Review
University of Minnesota Law School
Seth C. Oranburg, A Place of Their Own: Crowds in the New Market for Equity Crowdfunding, 101 Minn. L. Rev. Headnotes 147 (2016).