The JOBS Act at 4
Washington,
April 14, 2016 -
WASHINGTON – The Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing today examining the impact of the bipartisan Jumpstart Our Business Startups (JOBS) Act in the four years since it became law.
“It’s not very often that Congress can look back at a major piece of legislation and be able to measure the tangible, positive impact it is having on peoples’ lives and on our economy,” said Subcommittee Chairman Scott Garrett (R-NJ). “The JOBS Act did this not by creating new federal mandates or spending taxpayer money on wasteful programs, but by empowering entrepreneurs and innovators who were struggling under a regulatory regime that was better suited for 1934 than it was for 2016.”
The JOBS Act, which helps entrepreneurs and small companies overcome regulatory barriers to capital, originated as a package of bills in the Financial Services Committee. It passed Congress with strong bipartisan support and was signed into law in April 2012.
Four years later, the portions of the JOBS Act that went into effect immediately have helped emerging growth companies gain access to capital markets at a lower cost.
The Securities and Exchange Commission (SEC), however, delayed implementing other provisions of the JOBS Act and failed to meet the law’s deadlines to write required rules.
While the JOBS Act has made it easier for small companies to access capital, it alone is not enough to entirely overcome the regulatory barriers they face. So the Subcommittee also considered four bills today that will continue to eliminate and streamline regulations that make it difficult for small businesses to grow and create jobs on Main Street.
More information on those four bills can be found here.
Key Takeaways from the Hearing:
- The bipartisan JOBS Act is working, but Congress and the SEC must do more to help small businesses, entrepreneurs, and emerging growth companies access capital.
- The JOBS Act has led to a resurgence in the IPO market, with some 85 percent of companies completing an IPO since April 2012 filing as emerging growth companies.
- Companies have raised some $50 billion under the new Reg D provision that allows business to solicit an offering to the general public.
- While the newly modernized Reg A+ is only a year old, business are already beginning to issue securities under this exemption
- Recent reports indicate that the SEC has already received up to 30 applications for portals under the new crowdfunding rules, which are set to go live next month.
- The SEC has a responsibility to facilitate, not frustrate, capital formation.
Topline Quotes from Witnesses:
“The bipartisan JOBS Act proves that you do not need hundreds or thousands of pages of complex legislation to help Main Street businesses and protect consumers and investors. Weighing in at a lean seven titles spanning only 22 pages, the JOBS Act has already achieved significant results for small businesses seeking access to much-needed growth capital, while at the same time maintaining important investor protections and providing more opportunities for Americans to put their hard-earned dollars to work investing in America’s future.” – Paul S. Atkins, Chief Executive Officer, Patomak Global Partners
“This is an unusual area in that the companies hurt the most by high friction in capital formation don’t exist yet; with your continued support we hope thousands more of them can begin to make use of the JOBS Act to do what Congress originally intended: making it easier for good companies to raise capital and to create jobs.” – Kevin Laws, Chief Operating Officer and Chief Investment Officer, AngelList
“Without question, we at Nasdaq believe the most successful provision of the JOBS Act has been the ability of companies to file their registration statements on a confidential basis with the SEC. This has been most evident in the IPOs that have increased markedly from the biotech and life sciences sectors over the past four years since the JOBS Act was enacted. Many quality companies have been able to work with the SEC to finalize their registration without disclosure of their competitive, proprietary information and companies can better manage their decision to go public as they evaluate market conditions.” –Nelson Griggs, Executive Vice President, Nasdaq
