Last week, the House of Representatives approved the JOBS Act, a piece of legislation designed to make it easier for small businesses to raise capital and go public by simplifying the filing requirements. However, U.S. Securities and Exchange Commissioner Luis Aguilar expressed his concerns, echoing those of Senate Democrats and SEC Chairman Mary Schapiro. Aguilar felt the law was too lenient on critical investor protections and shared his thoughts on the SEC website.
As an SEC Commissioner, Aguilar emphasized he couldn’t stand by while laws that might harm investors were being considered. He pointed out that reducing too many investor protections might actually slow growth by deterring investors. He urged Congress to carefully review these issues, arguing that investors—who supply the capital needed for companies to grow and create jobs—deserve adequate protection.
The bill passed by the House allowed substantial companies, earning up to $1 billion annually, to qualify for important regulatory exemptions. This included an extended grace period on external audits following their initial public offerings. Aguilar warned that this could exempt most companies planning IPOs from essential disclosure requirements.
Aguilar noted that such reduced financial disclosure could obscure important information about a company’s performance history, making it harder for investors to evaluate them. Senate Democrats proposed lowering the exemption threshold to $350 million.
These proposed amendments turned the originally fast-tracked, election-friendly job solution into a potential point of partisan conflict. Republicans accused Democrats of blocking the bill with parliamentary tactics, partisan changes, and legislative “poison pills.”
Additionally, Senate Democrats suggested extending the Export-Import Bank’s lending capacity until 2015 and increasing its lending cap to $140 billion from the current $100 billion. Some Republicans opposed this, arguing that the Eximbank could limit private-sector lenders from participating in significant trade finance deals and that taxpayer-subsidized financing for foreign firms from the bank could negatively impact U.S. companies.
To pass, the amendments would need 60 votes. If they don’t pass, the Democrat-controlled Senate still has the power to reject the original House bill with a majority vote.