April 26, 2012
JOBS Act Forum: Surely It's All About The On-Ramp
Posted by David Zaring

The posts so far in the forum have been superb, and allowed me to update my priors on the JOBS Act, which were:

  • Changing the number of shareholders required before going public - the forum has convinced me that this looks like it was done randomly, but I understand the impetus.  Why should Facebook have to tie itself in knots to avoid going public if it doesn't want to?
  • Crowdfunding - I commend Andrew Verstein's paper on this to interested parties, but it all seems like small, if trendy, beer.  It's hard to imagine a start-up that gets any escape velocity at all continuing to rely on Kickstarter.  I can see crowdfunding working for Instagram, but not for a business that actually needs capital, like, say, an auto-dealer.
  • On-ramp - I thought before, and I doubly think now, that this is the very big deal, the total deregulatory tool that will affect many firms and investors.  I'm glad Congress provided the opt-out, and nothing in this life is perfect, but it seems to me that we should either believe in our system of securities regulation or we should not.  Creating quite a large band of firms that can go public without complying with a big chunk of the securities regs is a strange way to have it both ways.  Perhaps Congress views this as a way to test whether the capital markets should be deregulated for all filers.  Perhaps Sarbanes Oxley section 404 was a dramatic overreach that has led to a counterreformation that will, in the end, leave us with a lower level of supervision than existed before Enron.  But currently, this seems like a strange experiment, rather than a well-thought-out way to ease big firms into the regulatory environment.

Forum: JOBS Act, Securities | Bookmark

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