Schwab’s disruption of the status quo and commitment to low fees resemble the equity crowdfunding revolution.
Before laws changed in 1975, brokers were a necessity for buying stocks. In 1975, Schwab was one of the first companies to launch discount stock trading. Their “you can do it yourself” corporate mission statement undercut traditional broker-dealer trading costs by 30% or more. Similar to the legislation that reshaped stocks trading in the 1970’s, the JOBS Act is also watershed legislation for investors seeking to invest in private equity at lower costs. Title’s II and V of the JOBS Act will increase the amounts of capital available to companies from non-traditional sources (~accredited investors) given the ability to generally solicit while remaining private up to 2,000 investors. Regardless of the outcome of Title III of the JOBS Act (Crowdfunding, non-accredited investors), the dam has been cracked, impacting the establishment who have leveraged financial regulations to amass huge fees from investors and companies for over the past 70 years.