Final Approval by House Sends Jobs Bill to President for Signature
The New York Times
By JONATHAN WEISMAN
Published: March 27, 2012
WASHINGTON — The House gave overwhelming final approval on Tuesday to a package of measures intended to ease access to capital and investments for entrepreneurs, sending the bipartisan legislation to President Obama, who has said he will sign it.
The 380-to-41 House vote added a final exclamation point for the JOBS Act, which passed the House overwhelmingly early this month and easily passed the Senate last Thursday. Because the Senate amended the House version to add some investor protections, the House had to take it back up for a vote before sending it to the White House.
"The bipartisan JOBS Act represents an increasingly rare legislative victory in Washington where both sides seized the opportunity to work together, improved the bill and passed it with strong bipartisan support," said Representative Eric Cantor, Republican of Virginia, the House majority leader and the primary architect of the package.
The JOBS Act started as a cluster of minor bills that had bipartisan support and little opposition. Many of them originated at the White House out of the recommendations of Mr. Obama’s jobs council, a group of business and labor leaders whose final report made few waves.
But with the economy still looming large in the 2012 campaign, Republicans and Democrats — Mr. Obama among them — found it advantageous to pump up those modest measures into legislation promoted as a significant effort to hasten the recovery of the labor market.
"As the clock moves relentlessly toward November, people are going to have to show results," said Senator Ron Wyden, Democrat of Oregon and a supporter of the measure.
The JOBS Act would designate a new category of "emerging growth" companies that could conduct initial public offerings of stock while being exempt from certain financial disclosure and governance requirements for up to five years. It would also provide a new form of financing to small companies. Through crowd-funding, or the sale of small amounts of stock to many individuals, companies could solicit equity investments through the Internet or elsewhere, raising up to $1 million annually without being required to register the shares for public trading with the Securities and Exchange Commission.
Supporters see it as a breakthrough for entrepreneurs who hope to build an enterprise around sometimes offbeat ideas without having to sell them to larger companies.
But a few detractors worry that the measure will bring back the "boiler rooms" of the 1990s Internet stock bubble, where hucksters peddle stock tips to unwitting amateur investors. Pension funds, the lobby for older Americans AARP and the chairwoman of the securities commission had opposed aspects of the bill.
Amy Borrus, a spokeswoman for the Council of Institutional Investors, an investor watchdog group, said small companies — the focus of the new bill’s relaxed regulations — are particularly prone to fraud and accounting scandals. Senators did add some investor protections, but not enough, she said.
"We may rue the day this bill passed," Ms. Borrus said Tuesday.
Under the JOBS bill, companies with up to $1 billion in annual revenue would be free to ignore — for their first five years as a public company — regulations that were put in place after the end of the dot-com bubble and the collapse of Enron.
Among them are requirements to hire an independent outside auditor to attest to a company’s internal financial controls and restrictions on how financial analysts interact with investment bankers in promoting a company’s stock.
The bill also allows some companies to advertise for investors in almost any medium, a provision that skeptical regulators contend will mainly benefit the sale of worthless securities by brokerage firms.
Senate Democrats did add some investor protections that were ratified Tuesday by the House. Senators added a provision to ensure that any company using crowd-funding methods must still file some basic information with the securities commission, including the names of directors, officers and holders of more than 20 percent of the company’s shares, plus a description of the business and its financial condition.
Companies seeking to raise $100,000 or less must also provide tax returns and a financial statement certified by a company principal; those raising up to $500,000 must provide financial statements that are reviewed by an independent public accountant.
The Senate also inserted requirements that intermediaries seeking to help companies raise money through crowd-funding must register with the commission, make sure investors are advised of the risks they are taking, and take measures to prevent fraud.
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