|Sen. Jack Reed (D-R.I.) at the Capitol in Washington |
on June 11, 2008.
(Photo: Brendan Smialowski / The New York Times)
By Simon Johnson,
The Baseline Scenario | News Analysis
As it currently stands, the “JOBS” bill now before the Senate would gut investor protection in the United States. The title of the bill is a complete misnomer – anything that weakens investor protection makes it more risky to invest in companies and increases the cost of capital to honest entrepreneurs. (For more background on the bill and links, see this piece.)
Much of the 1930s-era Securities legislation, which served us well for more than 70 years, is about to be repealed in a moment of bipartisan madness.
Almost all attempts to amend the House version of this legislation – and to make it more favorable to investors – have now failed in the Senate, and the “cloture motion” received more than 60 votes (so the bill cannot be filibustered). But Senator Jack Reed (D., Rhode Island) is leading one last charge to make the Senate version more reasonable.
Here is the issue with H.R. 3606 (as the House version of the bill is known), from Senator Reed’s website:
“The SEC requires public companies to disclose meaningful financial information to the public. This provides a common pool of knowledge for all investors to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate public information can people make sound investment decisions. The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation’s economy. H.R. 3606 would roll back key investor protections, denying the public critical information that is essential to make sound judgments and would ultimately not lead to the proposed goal of the bill: providing for access to capital, particularly for small emerging companies.”The “JOBS” bill would permit even very large companies to avoid all public disclosures.