Last week, the House of Representatives approved the JOBS Act, aiming to make it easier for small businesses to raise money and go public by simplifying the filing requirements. However, U.S. Securities and Exchange Commissioner Luis Aguilar raised some concerns, echoing what Senate Democrats and SEC Chairman Mary Schapiro have also said. Aguilar believes the legislation is too lax on crucial investor protections.
As an SEC Commissioner, Aguilar stated his strong opposition to potential laws that might harm investors. He highlighted that removing too many protections could actually deter investors, which would hurt growth. He urged Congress to carefully review these issues, arguing that investors, as the essential capital providers, deserve and need adequate protection.
The bill approved by the House allows large companies, with earnings up to $1 billion annually, to qualify for major regulatory exemptions. This includes delaying external audits after their initial public offerings. Aguilar warned this could let many companies avoid important disclosure requirements during their IPOs.
He explained that less financial disclosure might obscure a company’s performance history, making it harder for investors to evaluate these companies. Senate Democrats proposed reducing the exemption threshold to $350 million.
However, these changes shifted the bill from a quick, election-friendly job solution to a potential point of partisan conflict. Republicans accused Democrats of using parliamentary tactics, partisan provisions, and legislative “poison pills” to impede the bill.
Senate Democrats also suggested extending the Export-Import Bank’s lending power until 2015 and raising its lending cap from $100 billion to $140 billion. Some Republicans opposed this, arguing it could keep private-sector lenders from significant trade finance deals and that the bank’s taxpayer-subsidized financing for foreign firms might disadvantage U.S. companies.
These proposed amendments would need 60 votes to pass. If they don’t pass, the Senate, controlled by Democrats, could still veto the original House bill with a simple majority vote.