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The JOBS Act: Growth Company Bonanza or Regulatory Morass?

Four opinions on whether the JOBS Act is a help or hindrance to companies seeking capital.
Vincent RyanApril 20, 2016
The JOBS Act: Growth Company Bonanza or Regulatory Morass?

Assessing a law that’s only four years old is difficult: by legislative life spans, four years is a blip. But the Jumpstart Our Business Startups Act of 2012 was designed to be a fast-acting measure — an economic defibrillator that would revive access to capital for small to midsize businesses. So it’s not too early to ask if the JOBS Act, a major achievement of the Obama administration, is a success so far. In addition, with some congressman introducing legislation that would alter the law significantly, it’s the perfect time to examine which parts of the JOBS Act work and which don’t.

Clearly, the law is not an unqualified triumph. The JOBS Act may have helped hundreds of companies access capital and go public, and, according to one media outlet, create 82,000 jobs in three years. But at the same time, could it have done more? Pieces of the act remain heavily underused. According to an E&Y JOBS Act update, for example, there have been less than 20 offering statements filed with the Securities and Exchange Commission under Regulation A+ since the final rules were adopted.

Experts have also criticized some of the red tape the JOBS Act has created. Of crowdfunding, the best-known aspect of the legislation, one SEC commissioner said last year: “I fear that many traps for the unwary are hidden in the regulations, creating potential nightmares for small business owners that fail to place regulatory compliance at the top of their business plans. Such burdens will spook many small businesses….”

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In this edition of Square-Off, four experts (two attorneys, the managing partner of an accounting firm, and one executive vice president of regulatory affairs) present their arguments for why or why not the JOBS Act has improved access to capital for small and mid-size businesses. They also examine which elements of the law have proved most fruitful, and which may be headed for the scrap heap or, at least, need to be substantially revised.