House Majority Leader Eric Cantor (R-VA) speaks about the Jobs act during… (Mark Wilson/Getty Images…)
Reporting from Washington — A bipartisan bill to make it easier for small businesses to raise investment cash by easing federal regulations cleared the Senate, despite warnings from opponents that it could open the door to a new era of fraud.
Senators voted 73 to 26 to approve the legislation, after adding a provision that would bolster investor protections on the emerging practice of "crowd funding" — soliciting pools of investors online and through social media.
The measure now returns to the House, which is expected next week to pass the bill and send it to President Obama, who supports the legislation.
The bipartisan support for the legislation reflects the desire of both parties to show voters that they are trying to bolster the economy. Republicans, in particular, have insisted that the Jumpstart Our Business Start-ups, or JOBS, Act would help smaller companies expand and lead to job growth.
House Majority Leader Eric Cantor (R-Va.) said the bill would "create jobs right away."
But many economists are skeptical that the legislation will create many jobs.
The bill aims to help smaller businesses attract investment capital by loosening regulations, some stemming from the Sarbanes-Oxley Act, that critics have called onerous and costly.
One provision in the legislation would make it easier for businesses to launch initial public offerings by phasing in federal reporting requirements over five years, or when the company reaches more than $1 billion in annual revenue.
"We will rue the day we rammed this through the House and Senate," said Sen. Richard J. Durbin of Illinois, the No. 2 Democrat, who broke with party leadership in voting against the bill.
An amendment that would require crowd-funding websites, which can pool up to $1 million in investments by selling stock online, to register with the Securities and Exchange Commission passed with bipartisan support.
Watchdogs warned against a provision in the legislation that would ease regulations on the advertising of private stock sales as well as another provision that would allow companies with more than 2,000 stockholders to bypass certain SEC disclosure requirements.
Currently, such disclosure is required for firms with 500 stockholders.