People in the startup community have been both pro and con on the SEC regulating ICOs. But, there are other asset classes out there that already exist that have some shady activity. Real estate is one of them. RSM recently put out a report on issues in real estate investing. One of them is fees, another is cybersecurity.
The place where the SEC is initially focusing is in the way general partners report their fees to investors. This includes both commissions, and the ongoing fees a fund charges to operate. They’re seeing a disconnect between what the documents are showing and then what the operations are and what is actually being charged.
One of the reasons we are excited about our investment in CFX is they are bringing transparency to a market that sorely needs it.
The state of California is requiring that there is much more disclosure in private placement memorandums. State and local government entities that invest in funds are going to require that fund managers adhere to this transparency. The change will have knock-on effects past real estate and into leveraged buyout funds and venture capital.
I think more transparency is a good development. I agree with former Supreme Court judge Louis Brandeis that “Sunlight is said to be the best of disinfectants.”