Editor’s Note: This story is being co-reported by Zac Estrada.
We’ll be liveblogging today’s Senate debate on the JOBS Act, so keep checking back in on this post for updates throughout. Below you’ll also find an overview of the bill, further reading, and a list of major proponents and opponents.
Liveblogging (roughly reverse chronological):
1:18 p.m. Senate passes amended bill 73-26
Toomey: “Might be one of the most constructive things we do this year.”
Reed: “We should try again and get it right. We will regret this vote.”
12:55 p.m.: Merkley amendment passes 64-35
Voting on Merkley amendment now
Reed amendment failed to pass after voice vote
Pat Toomey (R-PA): Believes Reed’s amendment will force private companies to go public; says act doesn’t leave investors unprotected. “Very optimistic, pleased we’ve been able to pull together such broad support.” Believes too many small companies have to weigh cost of complying with federal regulations against going public.
Jack Reed (D-RI): Says it’s a “misnomer” to call this a jobs bill.
Sen. Chuck Grassley (R-IA) [Hijacks the debate to talk about the insider trading bill] “This is bipartisanship but it’s not the kind of bipartisanship, intended or not, that this country deserves.”
Sen. Carl Levin (D-MI) on advertising provisions: “It will allow TV ads for get rich schemes with almost no oversight”
“Mr. president, this is a bad bill. Because debate was closed and severely limited, we won’t be able to fix its flaws” (says we can still partially improve it with amendments before the Senate) “These improvements if adopted, though welcome, are far from sufficient.”
“We are courting … the next financial bubble”
What Does the JOBS Act Do?
For a more in depth look at the various provisions of the JOBS Act, read our primer. Another good explanation is here.
- Legalizes crowdfunding.
- Provides an IPO “on ramp” exempting smaller companies from certain disclosure requirements.
- Increases the number of stockholders a private company can have from 500 to 2,000.
- Expands startups’ communications (advertising and solicitation) with potential investors.
- Lets incubators and online platforms like AngelList post certain financial documents.
- Amends analyst conflict of interest law.
More From BostInno:
700+ Entrepreneurs Back IPO “On Ramp” Bill. Should It Pass?
House Passes “On Ramp” Bill to Ease IPO Process for Growing Startups
The Shady Spam Crowdfunding Could Unleash
Crowdfunding is Great, But is it Right For Startups?
A Sample of Who’s For the Bill
The National Venture Capital Association is in favor, and previously gathered 700+ signatures for the IPO “on ramp” portion of the bill:
“During the past decade, emerging growth companies have faced numerous new challenges when considering an IPO. The regulatory on-ramp provisions thoughtfully address many of these issues and, for the first time in years, will provide much needed support for small companies with big potential. As more than 90 percent of job creation occurs after a company goes public, there has never been a more important time than today to pass this legislation.”
AngelList has collected more than 5000 signatures from entrepreneurs in favor of the JOBS Act:
These measures will also ease some of the regulations that slow the growth of these young companies and impede them from creating new jobs in the U.S. Furthermore, we undersigned investors believe this act keeps appropriate investor protections in place.
Bill Sahlman, a professor of entrepreneurial finance at Harvard Business School:
History suggests that fraud in newly public companies is not a problem, which makes sense given the intense vetting process by lawyers, accountants, the SEC, underwriters, and investors.
When you lower the cost of doing something, more of it gets done. That’s simple economics, and that’s the thrust of the JOBS Act.
Jeff Bussgang, venture capitalist, Flybridge:
“With the JOBS Act, we finally have two, much-needed major reform elements: (1) an “onramp” to make it less onerous for young companies with revenue less than $1 billion to go public; and (2) an ability for companies to raise up to $2 million in capital by soliciting small investments from many individuals. Both of these are very important mechansims to encourage more capital to flow into young, innovative companies.”
Fred Wilson (venture capitalist at Union Ventures) wrote in favor of the on ramp portion:
“This is a good bill. This undoes some of the bad stuff done to smaller public companies in Sarbox.”
A Sample of Who’s Against the Bill
The New York Times editorial board:
Congressional testimony, market analysisand academic research have shown that regulation has not been an impediment to raising capital. In fact, too little regulation has been at the root of all recent bubbles and bursts — the dot-com crash, Enron, the mortgage meltdown. Those free-for-alls created jobs and then imploded, causing mass joblessness.
“We wish we could raise a glass. This moment has been too long in coming. But the legislation it has spawned would be dangerous for investors and could harm already fragile financial markets.”
“With the so-called JOBS bill, on which the Senate is due to vote Tuesday, Congress is about to make the same kind of mistake again – this time abandoning much of the 1930s-era securities legislation that both served investors well and helped make the US one of the best places in the world to raise capital. We find ourselves again on a bipartisan route to disaster.”
Divided:
Dan Primack, Fortune (from Term Sheet, I’ll add the link once it’s up):
My likes are crowd-funding and changing solicitation rules (even though the latter will significantly change the way I do my job). My dislike is the IPO provision that would allow I-banks to offer analyst research on issuers that the bank also is underwriting. That Chinese wall was installed for good reason, and the case for tearing it down is not nearly as compelling. My ambivalence is reserved for most of the rest of the IPO rules (again, I don’t think they hurt, but I also don’t think there is an actual crisis), and the increase of the 500-shareholder rule.
“I do think these changes to the 500-shareholder rule make perfect sense… But this doesn’t mean that I’m a supporter of the JOBS Act more generally”
