The “Jumpstart Our Business Startups” (JOBS, isn’t that cute?) Act is now signed into law, so Obama now has another stunning item of inconsistency on his track record. After spending five years castigating Republicans for deregulation, he champions and signs a major bill deregulating the formation of publicly traded businesses in the capital market. Whether or not this headless turkey of a bill will succeed in actually inflating another economic bubble remains to be seen, but it’s certainly a valiant effort.
The Act goes into effect after 270 days, during which the SEC is charged with “implementing additional regulations.” Shades of the “Consumer Financial Protection Agency” which Congress was so concerned about that they passed it by name only and charged it with creating its own regulations. Obama is upset about “unelected judges overturning laws,” but neither he or Congress seem concerned about unelected bureaucrats defining the regulations under which businesses and citizens will function.
Some Congress critter was criticized by a constituent over the CFPA and retorted by saying that, “What do you expect us to do, write a bill that’s over a thousand pages?” Well, actually, yes. How many pages did you write for “health care reform,” dimwit?
Relieving a new company from financial disclosure requirements before startup and for five years after startup certainly does make it easier for new companies to enter the capital formation market, meaning to issue stock and sell it in the stock market. And I am finding it hard to breathe even as I type those words, horrified by the idea that investors are being deprived of the protection of strict financial disclosure laws. This came from a Democratic Senate and was signed by a Democratic President.
It also embraces the Internet as a major player in the funding activity for new businesses. Seriously, the Internet. One out of three cases on television judge shows are people who bought stuff on the Internet which turned out to be other than as advertised, or met people on the Internet who turned out to be bums. I have bought four things on the Internet, and three of them were rip-offs. The only thing that reliably makes any money on the Internet is pornography and scams.
Matt Taibbi says that the Act “will very nearly legalize fraud in the stock market.” I think that I disagree with the “very nearly” part of that. Read his whole take down on this bill; it’s good reading.
Forbes rather likes the act, but gives very little factual basis for that liking. It says that an amendment was added in the House to “protect crowdfund investors,” but doesn’t say what that protection consisted of, nor whether it survived into the final bill. It quotes the founder of a “social networking platform for entrepreneurs” (oh boy) as saying that the bill, “will make funding more accessible for startups by allowing non-accredited investors to participate.” That’s exactly what we need, more “non-accredited” participants in our capital markets.
As Judge Judy said just a day or so ago, they definitely made a movie about this. Who were the lead actors again? Oh yes, Dumb and Dumber.