"In thinking about the bills, one should keep in mind that the law of unintended consequences will never be repealed," he said at a Congressional hearing [] earlier this month.

"It is possible that, by making it easier to raise money privately, creating some liquidity without being public, restricting the information that stockholders have access to, restricting the ability of public market shareholders to constrain managers after investors contribute capital, and driving out independent research, the net effects of these bills might be to reduce capital formation and/or the number of small EGC IPOs," he added.

In addition, the House-passed bill before the Senate lacks safeguards for investors engaging in "crowd-funding," according to the Consumer Federation of America.

Crowd-funding allows a company to obtain start-up capital by tapping many small investors. It has also been used successfully by politicians to fund their political campaigns.