Michael B. Dorff has posted “The Siren Call of Equity
Crowdfunding” on SSRN.  Here is the
abstract:

The JOBS Act opened a new frontier in start-up financing,
for the first time allowing small companies to sell stock the way Kickstarter
and RocketHub have raised donations: on the web, without registration.
President Obama promised this novel form of crowdfunding would generate jobs
from small businesses while simultaneously opening up exciting new investment
opportunities to the middle class. While the new exemption has its critics,
their concern has largely been confined to the limited amount of disclosure
issuers must provide. They worry that investors will lack the information they
need to separate out the Facebooks from the frauds. This is the wrong concern.
The problem with equity crowdfunding is not the extent of disclosure. The
problem is that the companies that participate will be terrible prospects. As a
result, crowdfunding investors are virtually certain to lose their money. This
essay examines the data on angel investing – the closest analogue to equity
crowdfunding – and concludes that the majority of the issuers that sell stock
to the middle class over the internet will lose money for investors, with many
failing entirely. The strategies that help the best angels profit will not be
available to crowdfunders. Plus, the losses most issuers inflict will not be
offset by a few huge winners. Investors will not find tomorrow’s Googles on
crowdfunding portals because they will not be there; instead, start-ups with
real potential will continue to use other programs, such as the newly expanded
Rule 506 exemption. This outcome is the inevitable result of the nature of
start-up investing and crowdfunding. No amendments to the Act or rule-making by
the SEC can prevent it. The only solution that will protect investors is to
abolish equity crowdfunding for the unaccredited.