It's a done deal. President Obama just has to sign it.
The Jumpstart Our Business Startups Act (JOBS Act - H.R. 3606) passed the House of Representatives on March 8, 2012. The U.S. Senate began consideration of the bill on March 20, 2012 and passed an amended version on March 22 on a vote of 73 to 26 -- which then went back to the House for another vote.
The Republican-led House just gave an overwhelming final approval with a vote 380 to 41, and is now ready for President Obama to sign into law. (All `no' votes in both the House and Senate came from the Democratic side.)
It's interesting to note that the last time a Democratic president voted against the wishes of the majority of his party in Congress was when Bill Clinton signed the Gramm-Leach-Bliley Act in 1999, which deregulated the banks.
The new legislation that Obama is ready to sign extends the amount of time that certain new public companies have to begin compliance with certain requirements, including certain requirements that originated with the Sarbanes–Oxley Act.
Former Governor of New York Eliot Spitzer writes, "The almost fraudulently named JOBS bill -- passed last week in a rare showing of bi-partisan fervor."
At first, the future of the bill seemed in doubt when Senate Republicans rejected Democratic attempted to add protections to the bill and link it to re-authorization of the Export-Import Bank, an agency that helps U.S. companies finance their sales abroad.
House Republicans hailed the legislation as a jobs bill that by spurring capital formation would lead to small businesses hiring more people.
Despite warnings that less government oversight might mean more investment scams, Congress sent President Barack Obama the legislation that he endorsed, making it easier for startups to raise capital without running afoul of federal regulations.
The JOBS Act would designate a new category of “emerging growth” companies called "start-ups", 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 through crowd-funding. Through 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.
But 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. Mary Schapiro, chairwoman of the Securities Exchange Commission, had opposed aspects of the bill.
AARP senior vice president Joyce Rogers, noting that older people are disproportionately the victims of investment fraud, said the bill "lacks vital investor protections and undermines regulations that guard against fraud and abuse."
Amy Borrus, a spokeswoman for the Council of Institutional Investors (an investor watchdog group) said those small companies are particularly prone to fraud and accounting scandals.
George Canellos, director of the SEC's New York office, told a compliance industry conference sponsored by
Dow Jones that he is also worried about the legislation's impact.
"I have acute concern about the fraud risk," he said, noting that his views were his own. There is "example after example of micro-cap non-reporting companies that are more vehicles for fraud than they are for entrepreneurship."
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.
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.
Congress also has a
new tax plan for these small businesses. Senate Democrats offered a plan that competes with a House Republican push to give small businesses a 20 percent tax holiday. Senator Harry Reid (D-Nv.) said, "Our tax cut is targeted to help small businesses [who actually hire people], while Republican efforts are just camouflaged handouts to the wealthiest in America."
The GOP plan, sponsored by House Majority Leader Eric Cantor (R-Va.), would apply to any business that has fewer than 500 employees, including hedge funds, celebrities and, indeed, about half of the 400 richest Americans, who average some $100 million a year in business income.
Democrats estimated their overall plan would cost $26 billion for the year, while the GOP's would cost $46 billion.
Now, let's see if all these relaxed restrictions and tax breaks will create more jobs for average Americans.