Madness of Crowds or Regulatory Preconception?: The Weak Foundation of Financial Crowdfunding Regulation in the US and Italy

The purpose of this article is to compare US and Italian financial crowdfunding regulation. Its main focus is on how, with what policy goals in mind, by what technical means, and what theoretical assumptions, the US and Italian regulators intended to protect crowdfunders. Besides this introduction, it consists of five other paragraphs. The second paragraph concisely summarizes the retail investor protection argument in the field of securities regulation, showing how different theoretical characterizations correspond – or may correspond – to different policy approaches. The third paragraph intends to shed some light on the doctrinal debate regarding the possible behaviour of ‘crowds’ in the context of financial crowdfunding and the related regulatory implications. The fourth paragraph compares the US and Italian regulations, focusing on those key areas where the regulatory intervention has most notably been affected by the theoretical dispute. The fifth paragraph discusses the findings of our research, stressing the weak foundation of the present regulatory frameworks and advising a diverse policy and institutional approach to financial crowdfunding. Some final remarks then conclude the article in the sixth paragraph