A Critical Look at The Jumpstart Our Business Startups Act

Considering the Debate Surrounding Its Provisions and Implications

Leigh Salzsieder, PhD, CPA, ABV, and David W. Cornell, PhD, CPA, CMA

The Jumpstart Our Business Startups (JOBS) Act (H.R. 3606), which was signed into law on April 5, 2012, enjoyed bipartisan support in the U.S. House of Representatives and in the U.S. Senate, but its provisions generated some controversy and will have significant implications for many capital market participants. The JOBS Act works to increase access to capital by scaling back new regulations and modifying old regulations through three main mechanisms: the initial public offering (IPO) “on-ramp,” crowdfunding, and mini–public offerings. It affects an extensive list of laws, including the Securities Act of 1933, the Securities Exchange Act of 1934, Regulation FD (Fair Disclosure), the Sarbanes-Oxley Act of 2002 (SOX), and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Furthermore, the law will exempt a new class of filer—emerging growth companies (EGC)—from certain future rules.