One year ago, on April 5, 2012, President Obama had a Rose Garden signing ceremony for the only bipartisan legislative achievement of his administration, the Jumpstart Our Business Startups Act (JOBS Act). One year later the Congress, the White House and the SEC seem to be suffering from a form of amnesia, going about their business as if the JOBS Act had never happened, failing to speak about it or even remember they passed it.
The JOBS Act is the biggest change in U.S. securities laws since the FDR administration. It allows small businesses to raise more money from more people than ever before and still be exempt from many regulatory requirements that are not appropriate for small companies in the first place. It lifts the decades-old ban on companies generally soliciting interest in private investments (how did that ever pass 1st Amendment muster?!) which will allow millions of accredited investors to get information about investments without being part of the old boys network of ultra wealthy fund managers. It will let communities support their own businesses without relying on the kindness of strangers or big corporations to "do the right thing" in distressed neighborhoods. And it provides the opportunity to merge the power of social media with the passion for investing in entrepreneurs that is the key to our future growth and economic success.
Critics argue that people are too stupid, too poor or too vulnerable to be allowed to invest in private companies. This assumes that if people don't invest in private companies they will invest in something safer. Casual observation will show this is false. They invest in Exchange Traded Funds from Mongolia and Nigeria (that happened last week), they go to casinos and they buy lottery tickets. They get charged hidden fees by mutual funds that promise the moon but don't deliver benchmark matching returns.
Sadly, many critics (such as the Consumer Federation of America) assume everyone raising money is Bernie Madoff, when in fact, in a country where thousands of people raise money, there was one Madoff, not thousands. Medicare has $65 billion of fraudulent transactions . We don't stop offering Medicare. People who assume the crowd is corrupt are oblivious to the fact that the crowd is driving our economic growth now and is catching more fraud and bad actors than the SEC or Federal Trade Commission ever will. Case in point: who cleaned up eBay? People who rated sellers and shut down the bad ones cleaned it up, not the FTC.
The JOBS Act set a deadline of December 31, 2012 for the SEC to issue regulations implementing the Act. The SEC is oblivious to the deadline. They have managed to delay for a year an act Congress passed in a matter of months.
At a time when big companies are laying off workers and unemployment benefit claims are up, you would think the administration would want to trumpet its support of the biggest boost to small company formation in history. But the White House is oblivious to the opportunity; Obama didn't even mention it in the State of the Union.
A majority of both parties supported the JOBS Act and leaders in both parties claim credit for the accomplishment. You would think they would want to implement the Act as soon as possible, but except for a few members in either chamber, the Congress is oblivious too.
Here's who's not oblivious: hundreds of companies ready to be platforms to raise money for the American economy under the Act. (Poliwogg is one of those.) Thousands of companies who want to raise money to improve health care, to build local businesses in economically distressed cities, and to build clean energy projects. Millions of people who want to invest their money where their passions are in the hope of providing a better future.
In this year of living obliviously, the SEC has deprived those thousands of companies and millions of people the opportunity to invest in the American economy and create thousands of jobs. It is time for the SEC and the rest of the government to snap out of it, to wake up from this self-induced coma and give the American people the chance to build the future they wish to see.