More on the JOBS Act

News Brief

By Cydney Posner

Following is a post from thecorporatecounsel.net blog providing an update from Lynn Turner on the JOBS Act. It's so interesting, I quote it in its entirety:

"There have been many stories about how the Senate is conducting its business in recent days. The Senate has often claimed it is more reasoned and thoughtful than the US House of Representatives, but that is not necessarily so. In the case of the JOBS Act, its process has been much worse.

Usually a bill is introduced. To get any traction though, it needs to be introduced and sponsored by a Senator on the appropriate Senate Committee with jurisdiction over the subject matter of the bill. If the committee chair, and sufficient number of committee members are supportive, hearings about the legislation are held in the committee, as well as in subcommittees. The regulators are called to testify, as well as people who are expected to support or oppose the bill.

Typically the party in power picks most of the panel members testifying and the minority party is given one or at most two slots in which people they pick can testify. Then comes what is known as a "mark-up" when the committee members in a public meeting discuss the proposed bill, make proposed amendments and vote on those amendments. If approved, the marked up bill goes to the full floor for debate, when the Majority Leader puts in on the agenda and schedule for debate.

However, in the case of this legislation, a Senate hearing in a subcommittee planned for March 21st was canceled. And the legislation was pulled from the Senate circumventing any mark-up session and further hearings. None of the SEC Commissioners testified. The SEC Chair has written this letter to the Senate citing serious problems and deficiencies in the bill leaving investors further exposed to scams and schemes ala Bernie Madoff.

On Wednesday morning, I understand Harry Reid went to the floor saying he was pulling this out of the hands of the Banking Committee and he began pushing it through in rapid fire this week. That was not what some Senators expected. There was a caucus of the Democratic Senators on Wednesday over lunch at which Senators expressed concern with what Harry Reid and Charles Schumer were doing.

Later on as widely reported, a trade off of relief for blocked judges in exchange for deregulation of securities markets entered the fray making things even more confusing. First thing on Wednesday morning, some thought the Dems would introduce their own version of the bill, but Harry Reid in a nod of the cap to the venture capitalist and bio tech lobbyists (and their campaign contributions) decided that he would go with the House Republican's bill. While an amendment would be offered making it look like investors protections requested by the state regulators, the SEC and many investor and consumer groups would be entertained, that is merely a facade - a token effort which was dead on arrival before it was even introduced.

Perhaps the funniest thing, is that only people in Congress are calling this a jobs bill. It has become widely referred to in the media as "The Bucket Shop Reauthorization Act of 2012." Most of the people that the Dems did call to testify have said it will not create new jobs, (except perhaps among law enforcement agencies and prison guards)!!! As they say, God Bless America."

As noted above, the letter from SEC Chair Mary Schapiro, describes her various concerns about the Act and potential recommendations, including reducing the $1 billion annual revenue cap for emerging growth companies, restoring the various protections regarding analyst conflicts and research reports, restoring the internal controls audit requirement for larger companies, removing the standard-setting restrictions the Act would place on the PCAOB and FASB, requiring companies to file their "test-the-waters" materials with the SEC, elimination of the provision allowing confidential SEC filing, and adding safeguards to the crowdfunding provisions (such as basic information requirements and SEC oversight of intermediaries). In other words, she really likes the bill.

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