The JOBS Act, or the Jumpstart Our Business Startups, will roll back some major securities regulations and parts of a landmark legal settlement struck almost a decade ago by an old name from New York regulatory circles, Elliot Spitzer. The New York Times stated today in their artcle "Wall Street Examines Fine Print in a Bill for Start-Ups."
"Wall Street senses an opportunity. Davis Polk, a large law firm that caters to Wall Street, wrote in a recent note to clients that the JOBS Act represented “the most significant legislative loosening in memory of restrictions around the I.P.O. process and public company reporting obligations.”
Almost every big bank on Wall Street, including Goldman Sachs, Morgan Stanley and Bank of America, is poring over the provisions, which some firms say will open a new front on their business model. Several firms contacted Wednesday said they were studying the JOBS Act and were eager to see how regulators would begin to interpret the legislation. One Wall Street executive familiar with the JOBS Act but who declined to be named said the law would give firms “more flexibility” in covering emerging companies.
The new legislation passed through Congress over the objections of regulators, past and present, who warned of the potential risks to investors.
“It is a bad sequel to a bad movie,” said Eliot Spitzer, the former New York attorney general. “It shouldn’t be called the JOBS Act, it should be called the Bring Fraud Back to Wall Street Act.”
Mr. Spitzer was a crucial architect of the 2003 settlement, struck after the dot-com bubble, when investors lost millions of dollars investing in companies that regulators later claimed were improperly hyped by analysts. In some cases, analysts would privately disparage the same stocks they were telling investors to buy, including in one e-mail where an analyst called a security a “piece of junk.”
Spitzer weighs in on Viewpoint:
Duncan L. Niederauer is Chief Executive Officer, NYSE Euronext weighed in more constructively at CNN Money:
"Small businesses account for 99% of all U.S. companies. They make up half of private sector employment, and have accounted for almost all net job growth in the U.S. over the last three decades. Yet today, many entrepreneurs with the ability to turn innovative ideas into successful, job-creating businesses do not have adequate access to capital. By easing the regulatory burden on small firms, the Jobs Act will help open new sources of capital for growing companies at a critical stage in their development.
While the Jobs Act is certainly a positive development, meeting America's current economic challenges will require additional action. In order to reach pre-recession employment levels, the U.S. economy must still recover more than 6 million jobs lost during the downturn and create over 4 million new jobs to account for population growth.
We believe exchanges have a responsibility to help small companies grow by providing entrepreneurs with a source of capital. In the best of times, exchanges may facilitate a hundred or more companies executing an IPO each year. However, given the scale of our current jobs challenge, exchanges must look beyond the IPO and offer new avenues to allow small businesses to access capital markets."
CNN Money also covered "The hidden pitfalls of the JOBS Act."