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JOBS Act Passes Senate by Wide Margin

By Marlene Y. Satter

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The much-criticized, bipartisan JOBS Act passed the Senate on Thursday, 73-26, with one amendment that will send it back to the House for reconciliation.

The New York Times reported that the single amendment made slight changes to some of the disclosure requirements for small companies that sell shares. Despite strong support for the bill in the end, Democrats had tried for three days to attach amendments that would strengthen investor protections they, and numerous critics from the SEC to consumer advocacy groups, said had been stripped.

The amendment will require companies to provide tax returns or financial statements to would-be investors before soliciting equity investments of up to $1 million. The House version of the bill has no requirement for companies to provide data to potential investors. House Majority Leader Eric Cantor, R-Va., said he would schedule a vote on the bill for next week.

Critics were still outspoken about the bill. SEC Chairman Mary Schapiro had expressed concern over the bill’s potential for abuse, and Sen. Carl Levin, D-Mich., said, “We are about to embark upon the most sweeping deregulatory effort and assault on investor protection in decades.”

Jack E. Herstein, president of the North American Securities Administrators Association (NASAA) and Assistant Director of the Nebraska Department of Banking & Finance, Bureau of Securities, said in a statement after the vote, “The JOBS Act passed today by the Senate remains the fundamentally flawed product of a rush to legislate. It ignores the united and urgent pleas of leading national consumer and investor advocates not to roll back critical investor protections.”

He added, “This legislation will needlessly expose Main Street investors to greater risk of fraud by creating new jobs for promoters of Internet boiler room investment scams. Unfortunately, many investors may be harmed before this mistake is corrected.”