Sen. Kay Bailey Hutchison (R-Texas) discusses the Jumpstart Our Business… (Michael Reynolds / European…)
Reporting from Washington — 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 to 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 crowd-funding 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 start-ups 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 to 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 revenue. 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 J. Durbin of Illinois, the No. 2 Democrat, who broke with party leadership in voting against the bill.
Senators did, however, find bipartisan support to attach 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 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, a bipartisan effort from Sen. Jeff Merkley (D-Ore.), Michael Bennet (D-Colo.) and Sen. Scott Brown (R-Mass.), 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.”
Original Source: JOBS Act clears Senate, back to House for final passage