Unfortunately, all this may do is cause the addition of new regulatory requirements to follow when starting a company. New regulatory requirements translate into more up front and ongoing legal and administrative costs for the start-up. An investigation by the SEC could lead to the enactment of unrealistic constraints which then discourages innovation by diminishing the current "residual" risk entrepreneurs feel they can take when starting a new enterprise.
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Regulatory escalation by the SEC
Unfortunately, all this may do is cause the addition of new regulatory requirements to follow when starting a company. New regulatory requirements translate into more up front and ongoing legal and administrative costs for the start-up. An investigation by the SEC could lead to the enactment of unrealistic constraints which then discourages innovation by diminishing the current "residual" risk entrepreneurs feel they can take when starting a new enterprise.