The recent passage of the JOBS Act suggests that Congress has forgotten the purposes behind the regulatory changes it implemented as part of the Dodd-Frank Act, designed to create efficient regulatory control and to address the failures that led to the 2008 financial crisis.
The financial crisis lead to the loss of millions of jobs, saw the collapse of large financial firms and forced government bailouts of other large financial firms. After such financial turmoil, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”) was created to amplify the reach of securities and regulators in an effort to prevent future financial crisis’. The legislation aims to promote the financial stability of the United States by improving accountability and transparency in the financial system.
As of June 1, 2012 however, only 27 percent of the 398 rulemaking requirements were even finalized.
In April of 2012 the Jumpstart Our Business Startups Act (“JOBS ACT”) was signed into law, seemingly without any consideration of Congress’ objectives in enacting Dodd Frank. The JOBS Act is designed to provide “small” companies access to public capital markets by reducing costs associated with accessing these markets. To accomplish this, the JOBS Act eases the process of accessing public capital for a new category of filer, the Emerging Growth Company (EGC).
The JOBS Act has essentially unraveled, raising the question of whether it will at all improve capital markets and lead to warrantless deregulation and result in the perpetuation of fraud on potential new victims.
While Dodd-Frank was touted as the remedy against any future financial crisis the JOBS Act exempts from “remediation” such as significant segment of the financial population that it begs the question whether this exemption undermines the goals of the 2010 legislation.