BERNY DOHRMANN WHAT IS REALLY GOING ON OUT THERE

MARY JOE SEC CHAIRWOMAN

To: Mary Joe

RE: SEC HERO’S FOR SMALL BUSINESS
FROM: THE LARGEST OLDEST SMALL BUSINESS RAMP UP INSTITUTION RANKED # 1 BY FORBES – CEO SPACE INTERNATIONAL

 

Dear Mary Joe,

 

As you know it has been three long YEARS since the Congress passed EMERGENCY legislation, by overwhelming margins, a legislation we lobbied for five years to see pass and to see signed by President Obama. Mark Jones our advocate in this effort whom you know, was thanked personally by President Obama and Gov. Scott in Florida for our part in this legislation passing.

THREE YEARS to the last quarter horrible job report the worst new hire in 60 years. This is like Bill Clinton suggested arithmetic. As you well know the jobs figures are lies. The real employment is running over 20% if we include the long term unemployed and the 27 million no longer seeking work. To take them out of the count is wrong and a lie. Real America unemployment is why we have a weak versus a strong recovery.

The Jobs Act is essential to this recovery and all sustained recoveries. There is no economic model free of boom but modeling without sustained ever rising internal consumption to counties states regions and the nation as a whole. Sustained rising internal consumption is made possible by a policy of rapid continuous development of the core entrepreneur class to assure the job creation critical mass sustains the internal consumption ( Cooperative vs Competitive capitalism ).

Now three years later. The Congress sought to REMOVE ALL BARRIERS TO ENTRY for an inventor in Kansas to secure DEVELOPMENT ROUND CAPITAL that would establish his forward capital needs – develop a first balance sheet for the firm, provide sustained multi year development work to move into prototype ( product or service ) to move into beta first low run deliverables – to test various packaging ( Branding ) and marketing price methods to market and to with PROOF OF CONCEPT over two years of time – to move into full capitalization for LAUNCH ROUNDS.

The clear MANDATE of the Congress was to assure that unsophisticated inventor would no longer bare COST AND TIME BARRIER TO ENTRY by regulator hurdles they have NO WAY to over come. Period. The CROWD FUNDING PROVISION was clear and well written. If Congress wished to have FINRA regulate CROWD FUNDING they would have written FINRA into the law, as they were active counter lobbies by our side.

The notion the SEC would farm out regulating CROWD FUNDING in a JOBS ACT designed to REMOVE BARRIER COST AND TIME TO ENTRY is a notion that directly insults the legislation and the will of Congress and is sure to have serious unintended consequences from appropriation and oversize, which we will lobby vigorously for should a CONTEMPT OF CONGRESS take place. Finra is well on record they view every 1000 crowd funding start ups as a BILLION DOLLARS of resources removed from their broker trading accounts potentially. Within this lethal CONFLICT OF INTEREST Finra has proposed to the SEC that “rules” for execution of the Congress passed JOBS ACT CROWD FUNDING PROVISION in effect REWRITE THE LAW. Finra proposes:

  1. They alone regulate crowd funding.
  2. That portals they qualify and define on fee structure, are exclusive funnels the inventor in Kansas must now have time and front end cash to QUALIFY over to raise his capital.
  3. The borden on PORTALS which will only foster fraud, is so great, they must pass the liability and the insurance and the transaction costing to the inventor.
  4. The inventor raising start up seed development first rounds to prove concept must now pay fee’s greater than a private placement, face burdens of regulatory supervision greater than a private placement, and cost of up to 30% of funds raised along with equity that is a deal killer by Portals and brokers who add no value to the inventor of any kind.
  5. In an effort to have a weak appearance of regulating crowd funding – itself a state not a federal burden on fraud – the present three year proposed model is directly IN CONTEMPT OF CONGRESS and virtually kills the job act save for pump and dump pink sheet firms, that will accost investors with billions in fraud and take decades for the regulatory community tor recover from their error.

WORSE the Nation put off by three years on emergency needed massive job creation remains outside any modernization advance dreamers to capital. The rules of 10% of net worth or 10% of income in a year are suitability sufficient as defined in the act and SEC preferred rules.

We have proposed the SEC acquire SPROWTT, and use SPROUT as the state and federal regulatory platform RAP ( Regulatory Platform not portal ) to which all portals must link. The advantage is the transparency a lower staff team can now manage 100% of CROWD FUNDING offerings. The existing automation over complies in every single category of a regulatory wish list. Best this plan monitors fraud and catches fraud before it gets pandemic. The Finra Plan derails crowd funding a condition that as a CONTEMPT OF CONGRESS may revised regulatory frame work at the end of the day. We think if it proceeds it will.

Already Regulation A has been so cost and time contaminated by REGULATORY BURDEN the Jobs Act sought to federalize, unify and remove barriers for, that Regulation A is like Crowd Funding impotent for its mission to advance massive job creation.

We work every day, day in and day out, in all fifty states, with the dreamer. The institutional start ups create less than 6% of all jobs through private equity and venture angel pitch fests and the like. 94% of all Ventures are created and developed by successive seed rounds to market – a development round -= a launch round – a pre exit or ipo rapid growth round – followed by merger acquisition upon proof of concept to market or an IPO to globalize the venture. Insufficient capital is the largest PERCENTAGE OF FAILURE aspect to business along with education on tools and tactics. Firms like CEO SPACE provide the missing education. To saddle dreamers with first round proof of concept capital burdens so serious the private placement remains the only means to raise first rounds, is a DIRECT CONTEMPT OF CONGRESS.

There is no around THAT.

Crowd Funding is THE law. The SEC is charged to EXECUTE not rewrite or moderate that law – rewriting Congressional Law is CONTEMPT OF CONGRESS by an agency or their contractor FINRA. The consequences this late in the game with Fed Policy wavering and the world relying on the USA to lead us forward – we are massively behind the mandates.

The nation must pay for multiple fronts of mini wars for national security. Massive job creation pays taxes and ramps up national revenue during a three year period we needed that ramp up. Regulatory mis fires have derailed the most important job creation legislation in 100 years. 35 Million Small Businesses we work with GET THIS and will show their rage in the election. The wave of upset over this one area is beyond those making rules to appreciate day to day. We are in the fifty states and see it which crosses all politics. The entrepreneurs of your country are furious with you.

And truly it is THEY and no one else that pays the bills.

So thought hey lack the voice of the financial pharm and tech lobbies they will be heard so loudly next year.

My call for review is that the SEC follow the smart wisdom of their hearings and public statements and stand on the REMOVE ALL BARRIERS IN COST AND TIME from America’s dreamers. Take off their financial handcuff’s and the jobs and economy will flourish for a century.

We ask the SEC to regulate this area within rules the states enforce to monitor and act on fraud at the state level. The SEC has exiting tools to enforce systemic abuse in pink sheets and else where. A SPROUT SEC PORTAL to provide absolute transparency provides state Finra and SEC full disclosure – full compliance – and ease in total system monitoring.

We ask that the FINRA proposal be placed into the conflict of interest and CONFLICT OF CONGRESS position it deserves to be in. It is wrong minded and wrong direction for that dreamer you must protect at all cost – as the act is written for him not for investor fraud. Frauds will not care what rules are passed they will do their damage irrespective of the rules.

We have the regulatory frame work. It is late. We encourage you to publish final CROWD FUNDING RULES by year end 2015 three years after the JOBS ACT WAS PASSED.

Thank you for your courage to protect your agency and our nation.

Sincerely,

Berny Dohrmann – Chairman CEO SPACE INTERNATIONAL

Speaking for Small Business in All Fifty States – for 30 years……

— October 16, 2015

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