Popular Equity
regulatory concerns
regulatory concerns
Okay, I get it, and I see how this could help people. But is it legal?
I don't know. I'm not a lawyer, and by intentionally blurring the lines between donation and ownership, Popular Equity touches on all kinds of regulatory concerns.
If my band is listed on Popular Equity, what hoops do I need to jump through to convince the SEC that we're really a band?
Ethically, it seems to me that we're only helping everyone with service like this, and any hoops should be small. Specifically, as a band you're not claiming to keep great financial records, to one day demonstrate future profit growth, you're claiming that you'll keep making music, doing shows, and releasing songs. Those are pretty publicly obvious.
And because Popular Equity allows people to trade ownership of ventures, that people often expect to increase in value, we need to do the legal review.
Why does it feel ethical to you?
Everything is transparent. All investors have access to who owns what, and all listings are validated by trusted references. If anyone is playing games, there are simple whistleblower escalation paths.
There's no promise of future earnings. There's only the goodwill of the venture that you create, backed by you and your efforts. Initial purchases provides the cash that underwrites your venture. Any cash that comes in, largely stays in. This isn't day-trading. Initial prices are held extremely stable and over time. Things slowly open up as there's enough investment and interest to begin to provide a liquid trading market. Eventually any increases in brand value are the result of more people buying the venture than selling it.
We're also intentionally limiting the trading rate. To start, we're essentially making one market per month per brand. This encourages long-term buy and hold investments that support the artists and the investors. It's not set up to pump and dump.
It feels ethical to me because everyone wins. Fans are more aligned with the artists, artists are getting long-term growth in their core brand, and investors have a path to help the arts and nonprofits work on things that seem intrinsically valuable without profit. You don't have to be a donor or an investor, you can be both at once.
Doesn't this feel too good to be true?
As an investor, the stock market seems too good to be true to me. Money is a pretty transformational idea too. The piece we've missed to this point is the ability to bid on the potential value of people who aren't trying to make money. They're just trying to do things that are beautiful, or helpful, or informative. Why shouldn't we have a path to own some fraction of the goodwill these people and non-profits are creating? When we do, everyone's better off.
And before we decide how good this really is, we have to see that there is enough of an investor and artist/non-profit appetite to invest and even list themselves here. Everyone has to trust everyone. By underwriting all ownership with the initial cash, there's less risk to investors and artists/nonprofits interested in meaningful long-term contributions. If there isn't enough interest, this just becomes only a slight improvement over direct donations.
It'll only be as good and helpful as the market decides.
Contact: legal@popularequity.com