Reaserch On Legal Regulations On The Information Failure In The Investors Protection Of Equity-based Crowdfunding

Many countries have been carrying out the legalization of the equity-based crowdfunding.However,the slow development of the equity-based crowdfunding is not as same as what they thought.The opponents think that it is impossible to balance between the finance facility and the protection to investors,so the equity-based crowdfunding is unpractical.But the supporters think the fact that the equity-based crowdfunding’s low utilization should be ascribed to the unperfect rules,so as long as we enact the right rules,the value of the equity-based crowdfunding will be realized.The reason of the above controversy is that the legislators cannot strike a balance between the finance facility and the investors protection in the regulations,that is say,they fail to achieve the two goals.The effective protection is not to offer the investors the comprehensive rules,but a fair and transparent trade environment for them.Therefore,the equity-based crowdfunding must be based on changing the fact of the information failure.There are two ways of correcting the information failure including market itself and the rules.However,the market-based methods cannot work well because of the current situation of the equity-based crowdfunding.So we need the "visible hand",that is to say,the regulations.The investors protection system mainly includes information disclosure,the equity crowdfunding platform obligation and restrictions to investors.But these systems can not corresponds to the fact of the market.In order to solve these problems,it should set up the system of material information disclosure,perfect the obligations of the platforms and build lead investors rules.The material information disclosure system should explain what the meaning of the word "material" is and stipulate the basic content of the information be disclosed.The obligations of the platforms should encourage them to diversify the investigation methods and add some investor education materials,and most importantly,it must contain the legal liability.In view of the unability of the investors,it should build a unified lead investor rules to help investors in the item selection and the investment management.