JOBS Act loosens regulations
House Speaker John Boehner (R-OH), speaks about the Jobs act during a news conference at the U.S. Capitol on February 28, 2012 in Washington, D.C. President Obama signed the act into law today.
Sarah Gardner: A little good news today on the jobs front: The number of new jobless claims fell to a four-year low last week. No one's planning a party, but the numbers haven't been getting any worse lately.
And these days even that makes for enthusiastic headlines. That's no doubt what President Obama wanted to achieve today when he signed Jumpstart Our Business Startups, the JOBS Act. It's aimed partly at helping entrepreneurs attract investors.
But many of the new law's critics say it rolls back way too many investor protections put in place after Enron and the dot-com bust. Marketplace's Nancy Marshall Genzer has the story.
Nancy Marshall-Genzer: At the signing ceremony today, President Obama described the JOBS Act as a “game changer.” Consumer advocates say, is it ever.
Barbara Roper is with the Consumer Federation of America.
Barbara Roper: It has something for everybody except investors.
She says the JOBS Act rolls back requirements that make public the paperwork companies file to start selling stock. Roper says look at Groupon. It had disagreements with the Securities and Exchange Commission over accounting methods.
Roper: And all of that was played out in public.
Companies of a certain size can now keep financial information private for a longer period of time.
There are other regulatory rollbacks in the JOBS Act. Harvard law professor John Coates is worried about restrictions on Wall Street analysts that are being temporarily loosened. He’s afraid analysts will start hyping stocks again on TV like they did during the dot-com bubble.
John Coates: People were going on television and in the role, nominally as research analysts, were selling stock to the public.
In 2003, Wall Street banks agreed to put up a firewall between stock analysts and investment bankers in the same firm. Now, that firewall will come down when those firms work with most startups.
Jeff Stibel is CEO of Dun and Bradstreet Credibility Corp.
Jeff Stibel: What we’re creating here is a wild west environment.
Stibel doesn’t like the fact that investors will lose some protections. But he does support another part of the JOBS Act that allows startups to raise money over the Internet, so mom-and-pop investors can get in on the next big thing -- or lose their shirts. In this environment, Stibel says, it’s buyer beware.
In Washington, I’m Nancy Marshall-Genzer for Marketplace.