An electronic sign flashes the latest news concerning Facebook'S IPO on a billboard across the NASDAQ stock exchange on Times Square in New York, May 17, 2012. Facebook is set to go public on May 18, 2012 and is likely to have an estimated market valuation of over 100 billion USD when its shares begin trading on the NASDAQ. (Image credit: AFP/Getty Images via @daylife)

For two days in a row an unsolicited email has shown up in my inbox.  According to the email, a lot of you little folks — so-called “small time investors” — are fed up with getting shut out of IPOs. In fact, today’s email contains this statement:

“Small time unaccredited investors  are tired of seeing all the hype about upcoming IPOs, yet always getting shut out,” notes Daniel Hirsch, ManagingPartner, First Line Capital.

Congress Prepares To Sandbag Investors And Their Financial Advisers With More Wall Street Self RegulationBill SingerContributor

New York State's Top Court Tells Wall Street Compliance Pros To Be Afraid, Be Very AfraidBill SingerContributor

Top Broker Dealer Compliance Issues Disclosed By State Securities RegulatorsBill SingerContributor

Okay, now just exactly which IPOs are we all supposedly upset about missing?

Was that the $38 a share Facebook IPO of May 18, 2012? Wow, I’m really disappointed at having missed out on that one.  What’s it trading at today — something like $20?

Or is that the Groupon IPO that came out at $20 a share and is now just floating above $4?

Maybe you meant the Zynga IPO of $10 but that’s now a tad under $3.

Yeah, I know, there are IPOs that have traded above the public offering price but you still gotta be careful about piling on one of those can’t-miss-next-big-thing bandwagons.  Lately, a lot of those wagons’ wheels are coming off and the band members can’t play a lick.

With all due respect to Managing Partner Hirsch and his observation, maybe it’s a good thing for the little guy to maintain a healthy skepticism about the “hype” that’s generated by Wall Street and to keep in mind how some recent high-flyin’ IPOs haven’t just crashed to Earth but have become buried beneath it.

The whole JOBS Act and crowdfunding legislation has ample numbers of supporters and detractors.  I find merit on both sides of the issue.  The North American Securities Administrators Association (“NASAA”) issued NASAA: The JOBS Act an Investor Protection Disaster Waiting to Happen (March 22, 2012), and the title of that release pretty much telegraphs the association’s position. Pointedly, we have this quote in NASAA’s release:

“The JOBS Act passed today by the Senate remains the fundamentally flawed product of a rush to legislate. It ignores the united and urgent pleas of leading national consumer and investor advocates not to roll back critical investor protections,” said Jack E. Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance, Bureau of Securities.

“This legislation will needlessly expose Main Street investors to greater risk of fraud by creating new jobs for promoters of Internet investment scams. Unfortunately, many investors may be harmed before this mistake is corrected,” Herstein said. . .

The Securities And Exchange Commission also weighed in on the issues of crowdfunding and the JOBS Act, for example in Jumpstart Our Business Startups Act Frequently Asked Questions About Crowdfunding Intermediaries (May 7, 2012):

Crowdfunding issuers. Title III of the JOBS Act amends Section 4 of the Securities Act to create a new exemption for offerings of “crowdfunded” securities. Specifically, the JOBS Act amends Section 4 of the Securities Act to exempt issuers from the requirements of Section 5 of that Act when they offer and sell up to $1 million in securities, provided that individual investments do not exceed certain thresholds and the issuer satisfies other conditions in the JOBS Act, some of which will require rulemaking by the SEC.

One of these conditions is that issuers use the services of an intermediary that is either a broker registered with the SEC or a “funding portal” registered with the SEC.

Funding portals. Title III of the JOBS Act adds new Section 3(h) to the Exchange Act which requires the SEC to exempt, conditionally or unconditionally, an intermediary operating a funding portal from the requirement to register with the SEC as a broker. The intermediary, though, would need to register with the SEC as a funding portal and would be subject to the SEC’s examination, enforcement, and rulemaking authority. The funding portal also must become a member of a national securities association that is registered under Section 15A of the Exchange Act.

A funding portal is defined as a crowdfunding intermediary that does not: (i) offer investment advice or recommendations; (ii) solicit purchases, sales, or offers to buy securities offered or displayed on its website or portal; (iii) compensate employees, agents, or others persons for such solicitation or based on the sale of securities displayed or referenced on its website or portal; (iv) hold, manage, possess, or otherwise handle investor funds or securities; or (v) engage in such other activities as the SEC, by rule, determines appropriate. . .

All of which leads me back to the unsolicited emails about crowdfunding that I received the last two days.

I guess it’s the beginning of a new wave of marketing from folks getting ready to advance this new concept.  Me? I ain’t plunkin’ down any bucks for any IPO, crowdfunded or otherwise, until I’ve done my due diligence and checked everything and everyone out.  Given that the big boys screwed up with Facebook and other offerings, it’s obvious that only fools rush into can’t-miss opportunities.  Apparently we all should expect to be getting marketing information about crowdfunding opportunities, portals, and the like. As with any investment, take your time, ask questions, demand answers, and hold on to your checkbook.

Rather than be accused of paraphrasing, I have posted the full-text email message below with some deletions noted for privacy.  Under no circumstances should readers view this posting as an endorsement or approval of any representations — nor should you infer anything negative.  I merely offer the email as an example of how this sector is developing and what investors should expect: