JOBS Act: 'scandal waiting to happen'

Reuters reports that investor advocates are meeting with the US Treasury to try to minimize the damage to the financial system that will occur as a result of the JOBS Act and its explicit elimination of disclosure requirements.

Regular readers will recall that the JOBS Act turns back disclosure requirements to the 1920s when there were none.  The Act is yet another effort by the Obama Administration at destabilizing the financial system and giving Wall Street anything it asks for.

Advocates for investors will meet with U.S. Treasury Department officials and others on Wednesday to express concerns about a new law that makes it easier for smaller companies to raise capital, people familiar with the matter said. 

The Jumpstart Our Business Startups law, or JOBS Act, won overwhelming bipartisan support from Congress in March. 

But critics of the legislation have said it goes too far in scaling back important protections for investors....

Investor protections that are necessary if we are to have deep, liquid, vibrant capital markets.

The new law reduces certain regulatory requirements for companies with less than $1 billion in revenue seeking to go public, raises the number of shareholders that trigger public financial reporting and lifts a long-time ban on advertising for private offerings.

Basically, the new law repeals the Securities Acts of the 1930s for companies with less than $1 billion in revenue.

Before the bill's passage, SEC Chairman Mary Schapiro and SEC Commissioner Luis Aguilar both called for major changes to the legislation, most of which were not adopted before President Obama signed the measure into law. 

A majority of bankers also agreed in a recent survey that the law could open the floodgates for accounting problems. 

Earlier this week, as the Sarbanes-Oxley law celebrated its 10-year anniversary, former Senator Paul Sarbanes said the JOBS Act's lax regulatory scheme for IPOs below $1 billion in revenue is a "scandal waiting to happen."

A scandal waiting to happen?  No wonder it passed with overwhelming support in Congress and was signed by President Obama.