JOBS Act clears Senate, back to House for final passage
A bipartisan effort to make it easier for smaller businesses to access investment cash was back on track after clearing the Senate, but not without grave warnings from opponents who insisted it would open the door to a new era of fraud.
Senators
added a provision that would bolster investor protections on the
emerging practice of crowd-funding – soliciting pools of investors
online and from social media. The bill passed overwhelmingly, 73-26, but
broader efforts to amend it had been turned back by GOP-led opposition.
President Obama has given the
measure qualified support, and it now returns to the House where GOP
leaders expect swift passage, sending it to the White House next week as a rare bipartisan victory.
“We
are heartened by the important investor protections added to the
crowdfunding provision and will be vigilant in monitoring this and other
elements to ensure the overall bill achieves its goal of helping
entrepreneurs while maintaining protections for investors,” said Jay Carney, the White House Press Secretary, in urging Congress to quickly finish the bill.
Both Republicans and Democrats
want to show voters they are working to improve the nation’s
unemployment rate, with the GOP particularly characterizing the
Jumpstart Our Business Start-ups, or JOBS Act, as legislation that would
help smaller companies expand and create jobs.
“The bipartisan
JOBS Act will cut through Washington red tape and help these small
businesses and startups grow, expand and create jobs right away,” said
the bill’s champion, Majority Leader Eric Cantor
(R-Va.), who had dismissed as “phantom investor protection issues” the
Senate’s efforts to change the bill to address concerns from AARP,
federal regulators and others that weakening regulations could lead to
fraud.
Passage in the Senate came after a tumultuous week that
splintered Democrats, whose leaders were reluctant to halt a bill that
had broad political support, including from powerful investment banking
interests. Only 23 lawmakers had voted against the earlier version of
the bill this month in the House.
The JOBS Act aims to help
smaller businesses attract investment capital by loosening federal
regulations, some stemming from the Sarbanes-Oxley Act of 2002, that
supporters of the bill say can be onerous and costly.
One
provision in the legislation would make it easier for businesses launch
initial public offerings by phasing financial reporting requirements
with the Securities and Exchange Commission over five years or until the
company achieves more than $1 billion in annual revenues. The SEC chief
said this exemption was too broad, and would allow even large firms to
bypass federal regulation.
“We will rue the day we rammed this through the House and Senate,” said Sen. Richard Durbin of Illinois, the No. 2 Democrat, who broke with party leadership in voting against the bill.
Senators
did, however, find bipartisan support attach an amendment that would
require crowd-funding websites, which can pool up to $1 million in
investments by selling stock online, to use register with the SEC.
The
change would also require disclosure by investment promoters as a way
to prevent anonymous “pump-and-dump” operations, and it would cap the
annual amount individuals can invest.
That amendment was a bipartisan effort from Sen. Jeff Merkley (D-Ore.), Michael Bennet (D-Colo.) of Colorado and Sen. Scott Brown (R-Ma.), is expected to remain when the House considers the bill next week.
But even Merkley voted against the final product, calling it a “paved highway to predatory scams.”
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