April 23, 2012
Special Forum: JOBS Act - The Devil's in the Details . . . .
Posted by joanheminway

Bob’s initial post provides a great summary to start us off.  I will just add two general things about the JOBS Act at this juncture—a policy observation and some additional resources for your consideration (and possible review).

Because of the overall political nature of the legislation as a deregulatory reaction to Dodd-Frank and as a face-saving exercise (given congressional inaction on partisan grounds) and also as a result of the bundling of multiple initiatives in the JOBS Act (all as described in more gentile terms by Bob in his post), the policy underpinnings of the JOBS Act are confused.  Let’s face it.  This legislation is not about jobs.  It is (at least facially) about helping keep certain small issuers private (even though they have many shareholders), decreasing the costs to small public issuers, and engaging new investors in small business capital-raising.  But these objectives, especially when viewed in the light of the overall policies underlying the federal securities laws , may work at cross-purposes to each other.  The ability of the JOBS Act initiatives to serve its ostensible objectives and the balancing of those objectives against the overall investor and market protection norms of the Securities Act of 1933 and the Securities Exchange Act of 1934 remains to be seen.  The SEC’s significant rulemaking authority under the JOBS Act will certainly have something to say about this issue . . . .

As further background to the forum for this week, I want to direct you (by way of links to the Social Science Research Network) to articles written by Professor Nikki Pope, me and Ryan Hoffman (a former student), Professor Steve Bradford, and Professor Tom Hazen.  These articles provide some immediate background to the JOBS Act, focusing on crowdfunding, the subject of the CROWDFUND Act (Title III of the JOBS Act).  Although crowdfunding will be the main subject of posts on Thursday, these four articles also cover other aspects of the JOBS Act, including (in text and citations) a lot of background on small capital formation generally and the role of Section 12(g) in that context.  (Section 12(g) of the Securities Exchange Act is the principal focus of posts in this forum tomorrow.)

Folks, as with a lot of legislation, the devil’s in the details on this one.  This is ugly legislation in many respects, and I agree with Steve Davidoff that Congress should not have waded as deeply into these waters as it did.  Like Sarbanes-Oxley and Dodd-Frank, the JOBS Act represents a hodge-podge of disparate provisions.  However, while Sarbanes-Oxley and Dodd-Frank arguably were intended principally to put fingers in actual holes in a dike, the JOBS Act appears in pertinent part to put fingers in perceived—or at least unsubstantiated—holes in a dike.  It remains to be seen whether the SEC will be heroes or villains in this story (and people have different views on what a hero and a villain might be in this context).  The SEC is soliciting pre-proposal comments.  Comments can be posted here.  They have started to roll in.  Let the fun begin!

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