The Senate took up debate on the House version of the JOBS act once again Wednesday after an abortive attempt on Tuesday to strengthen consumer protections by amendment failed, with a planned vote on the bill canceled as a result.
Consumer advocates had attacked the bill, which passed the House last week with bipartisan support, saying that it rolled back measures to protect consumers, particularly when it came to crowdsourcing. State regulators were particularly critical of being denied the capability of policing companies looking for crowdsourced funding, although critics from the SEC to consumer organizations had harsh words for the bill.
As a result, when the bill advanced to the Senate, an attempt was made to amend the bill and restore some of the investor protections eliminated in the original bill. When the amendment failed, as did a second amendment looking to reauthorize the Import/Export Bank, Senate Majority Leader Harry Reid, D-Nev., pulled it and adjourned the session.
In addition, a hearing scheduled by the Senate Subcommittee on Securities, Insurance and Investment, “Examining Investor Risks in Crowdfunding,” set for Wednesday morning, was canceled. The hearing would have brought testimony from Mercer Bullard, associate professor of law, the University of Mississippi; Nick Bhargava, cofounder of Motaavi, LLC; Dana Mauriello, cofounder of ProFounder; and A. Heath Abshure, commissioner of the Arkansas Securities Department.
After a procedural vote to consider the bill passed Wednesday morning, debate resumed on investor protections. Much of the debate centers on the provisions for crowdfunding, and additional debate was expected to continue in an evening session as Democrats attempt to strengthen segments that deal with regulation that will protect investors. Votes on amendments will be held Thursday.
Jack Herstein, president of the North American Securities Administrators Association (NASAA), said in a statement, “Preempting state authority is a very serious step and not something that should be undertaken lightly or without careful deliberation, including a thorough examination of all available alternatives.”
Barbara Roper, director of investor protection at the Consumer Federation of America (CFA), said of Tuesday’s canceled vote in a statement, “With today’s vote, a majority of senators sent the message that they have heard the warnings of experts and recognize that the JOBS Act is a deeply flawed bill that threatens to unleash a new wave of fraud on unsuspecting investors and damage our capital markets. Senate Majority Leader Reid’s decision to delay further action is a welcome development.”
She added, “Senators have been put on notice: A vote for the House bill is a vote to weaken investor protections, undermine market transparency, and damage the integrity of our capital markets. If the bill is adopted without investor protection changes, the public will be left to suffer the consequences.”