Battle over crowdfunding slows JOBS Act passage
Democrat-sponsored amendments in Senate block vote of House-passed bill on crowdfunding and IPO rule changes.
Crowdfunding will likely become the new law of the land, but not as soon as its advocates had hoped.
The JOBS Act passed the House easily on March 8 by a 390-23 vote, and its supporters hoped it would sail through the Senate. But today the Act has been delayed in the Senate by new arguments and amendments.
Senate Democrats created an amendment to the Act, S.AMDT. 1833, designed to improve transparency and consumer protections around the crowdfunding portion of the act. It would replace H.R. 2930, the Crowdfunding bill that is incorporated into the JOBS Act. Today, the S.R. 1833 amendment failed its cloture vote, which would make it immune to filibuster, and is likely dead.
Without the protections from 1833 in the JOBS Act instead of the looser rules written into the House version, the Senate is unlikely to pass the Act. Expect public finger-pointing to commence as both sides square off and complain about their opposition delaying the passage of this Act. The will try, of course, to reach a compromise. The high-level concepts of the JOBS Act--crowdfunding to open up startup investing to the public, and less onerous regulations for companies to go public--have bipartisan support.
Strong editorial opposition to the House version of JOBS has come from the likes of Bloomberg and The New York Times, where editorials predict that the Act will usher in a new era of scams and bilking as regulations for capital-raising in small companies are scaled back; the comparison is often made to the formation of the SEC after the 1929 stock market crash, which was caused, in part, by an under-regulated securities market that accelerated out of control and became doomed to pop, taking consumer nest-eggs with it.