Last week, the House of Representatives gave a green light to the JOBS Act. This legislation aims to make it simpler for small businesses to accumulate capital and publicly list their shares by easing the process for filing requirements. However, U.S. Securities and Exchange Commissioner Luis Aguilar expressed his apprehension. This echoes the concerns raised by Senate Democrats and SEC Chairman Mary Schapiro. Aguilar stated that the law was excessively lenient with vital investor protections. He shared his views on the SEC website.
“As an SEC Commissioner, I refuse to stand by while potential laws that may harm investors are being considered,” Aguilar asserted. He emphasized that stripping away too many investor protections could, counterintuitively, hinder growth by discouraging investors. Aguilar urged Congress to properly review these matters, asserting that the investors, being the capital suppliers necessary for companies to grow and create jobs, deserve and need adequate protection.
The House-approved bill allowed sizeable companies – those grossing up to $1 billion annually – to qualify for essential regulatory exemptions. This included a prolonged grace period on external audits following their initial public offerings. Aguilar suggested that this could exempt most IPO aspirants from vital disclosure requirements.
“This diminished financial disclosure could obfuscate the issuer’s performance history, complicating investors’ assessment of these companies,” he claimed. Senate Democrats suggested slashing the exemption threshold to $350 million.
However, such Democrat-proposed amendments transformed the bill from a fast-track, election-friendly job solution to a candidate for partisan disagreement. Republicans swiftly accused Democrats of obstructing the bill with parliamentary tactics, partisan provisions, and legislative “poison pills.”
Moreover, Senate Democrats suggested that the legislation should prolong the Export-Import Bank’s lending capability until 2015, boosting its lending cap to $140 billion from its current $100 billion. Some Republicans opposed this, arguing that the Eximbank could prevent private-sector lenders from participating in significant trade finance deals. They also argued the taxpayer-subsidized financing offered to foreign firms by the bank could harm U.S. companies.
The amendments would necessitate 60 votes to pass. If they don’t succeed, the Democrat-dominated Senate still possesses the power to veto the original House bill with a majority vote.
