Manatt Partner Comments on Banks' Assessment of Crowdfunding

"Banks' Friend or Foe?"
ABA Banking Journal

October 2013 - Manatt's Craig Miller, co-chair of the firm's Financial Services & Banking Practice, spoke to the ABA Banking Journal on how banks are handling the crowdfunding trend.

As reported by the ABA Banking Journal, most crowdfunding (or "crowdfinancing") activity in the U.S. has been in the donation and reward phase, but that is on the verge of changing. In late September, companies were permitted to make general public solicitations to raise capital for a business from accredited investors under the JOBS Act. Later, after securities regulators issue rules, Title III's provisions will go into effect which will enable companies to raise equity or to offer debt through crowdfunding. Currently, community bankers don't focus much on crowdfunding, and some are skeptic of its trendiness and its concentration solely on funding.

"Banks think they provide more services than just financing," said Miller, who thinks bankers will see crowdfinance more as a one-shot deal, not the relationship business that banks try to develop with a company. And getting involved directly in a crowdfinance, Miller suggested, would become a "regulatory morass" for a bank.

Read the article here.