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Chelsea Green Blog

Legalize Local Investment!

Author Michael Shuman thinks Wall Street isn’t just greedy — he things it’s a bad investment too.

He’s an advocate for keeping your investment dollars close to home, in small local businesses.

Nothing controversial there, but did you know that certain types of investment structures for small businesses are illegal?

To find out more, read Shuman’s latest blog post over at the Resilience.org. Here’s an excerpt:

For decades, we’ve lived under an oppressive system of investment apartheid. The 1% who are millionaires (known under federal securities law as “accredited investors”) are free to invest in anything they choose. With the referees in their back pockets and all kinds of home-court advantages, it’s easy for them to win the wealth-accumulating game. The other 99% of us are stuck with the slim pickings of the Fortune 500 public companies listed on Wall Street—the companies least connected to the well being of our communities. Before small businesses can accept investment from the 99%, they have to spend many tens of thousands of dollars on legal, accounting, and government filing fees. While most of us would like to invest in small businesses in our community, practically speaking, securities laws make it impossible. This is a far more extreme big-business bias than exists in banking, where we can easily move our money to local banks and credit unions. Worse, we have four times more money in Wall Street investments – stocks, bonds, mutual funds, pension funds, and insurance funds – than we do in banks . We are the ones fueling the multinational companies we distrust. If we could overhaul securities laws that we enacted during the early Jurassic Period, local businesses could be fabulous investments. They are the most important job producers in the economy. They account for more than half of private sector jobs. They are increasingly competitive—so much so that their their share of the national workforce actually growing. Stunningly, sole proprietorships are three times as profitable as C-corporations. For the first time in decades, reform is finally possible. A remarkable coalition has emerged bringing together leaders of the Tea Party and the Obama Administration. They agree that investment apartheid should be abolished. Republican Representative Patrick McHenry of North Carolina is leading the charge in the House to legalize small businesses raising money through large numbers of small investments (aka “crowdfunding”), with minimal paperwork, for companies raising less than $1 million. Recent changes in his bill (HR 2930, The Entrepreneur Access to Capital Act) actually make it very similar to reforms President Obama proposed in his jobs package in September.
Exciting! Michael includes links in his post to a petition and list of representatives for you to contact personally. And stay tuned here to find out more about his forthcoming book, Local Dollars, Local Sense: How to Shift Your Money from Wall Street to Main Street and Achieve Real Prosperity!


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