NSBA Submits Comments to SEC on JOBS Act

June 19, 2012

The NSBA strongly supported the Jumpstart Our Business Startups Act [Public Law 112–106] (the “JOBS Act”) signed into law in April.  This bipartisan legislation is designed to substantially reduce the regulatory impediments to small firms’ access to capital markets.  Properly implemented by the Securities and Exchange Commission (SEC), it will dramatically improve small companies’ access to capital and reduce their cost of capital by reducing the legal, accounting and other administrative cost of small businesses and by reducing the need to pay substantial fees to investment bankers and other broker-dealers to access capital markets.  The passage of the JOBS Act demonstrates a broad bipartisan understanding that existing securities law poses an unreasonable burden on the ability of small firms to access the capital markets, harming economic growth and job creation.

The SEC must adopt a number of rules to implement the JOBS Act.  Moreover, clarification or amplification by the SEC would be highly desirable where the statute is either very general or ambiguous.  NSBA asked that the SEC guard against regulations that will undermine the purpose of the Act by imposing unneeded complexity, opaqueness and regulatory risk on small firms or funding portals.  The regulatory framework should be straightforward and streamlined, imposing the minimum necessary cost and regulatory risk on small firms seeking to raise capital.

On Tuesday, June 12, NSBA provided detailed comments regarding the forthcoming JOBS Act regulations, especially regarding Title II of the Act (eliminating the prohibition against general solicitation or general advertising when seeking accredited investors) and Title III of the Act (which provides a crowdfunding exception to the registration requirements of the Securities Act of 1933).  The crowdfunding exception will allow issuers to raise, subject to substantial regulation, up to $1 million a year in small increments from ordinary investors through a registered funding portal.  State Blue Sky laws regarding registration and qualification are preempted.  This aspect of the Act has the potentially to transform small firms’ access to capital provided that the regulatory framework adopted by the Commission does not unnecessarily impede either issuers or funding portals.

To read NSBA’s comments, click here.