You are hereHome >
A misnamed package of legislation to weaken investor protection laws -- the so-called Jobs Act -- is speeding through the House this week. The bills would make it easier to file Initial Public Offerings (IPOs) without providing investors accurate information, make it easier for firms to recruit, or "crowd-fund," new, unsophisticated investors on the Internet and roll back several parts of the landmark investor protection law known as the Sarbanes-Oxley Act enacted after the Enron, Worldcom and related accounting scandals. Fortunately, while some Senators are careening down the road with the House, others are taking a more measured approach.
Here is a letter to the House from the PIRG-backed Americans for Financial Reform and the Consumer Federation of America. Here is a letter to the Senate from AFR, U.S. PIRG, CFA and other leading groups. U.S. PIRG also sent an individual letter. Excerpt from our Senate letters:
"While we are strong supporters of measures to promote job growth, these bills (recently repackaged as the JOBS Act) are premised on the dangerous and discredited notion that the way to create jobs is to weaken regulatory protections. Each of these bills would in its own way roll back regulations that are essential to protecting investors from fraud and abuse, promoting the transparency on which well-functioning markets depend, and ensuring the fair and efficient allocation of capital. Moreover, they ignore the basic free market principle, backed by extensive research, that investors respond to reduced regulatory protections by imposing a higher cost of capital. Because they are likely to result in higher capital costs that negate any compliance cost savings, these bills don’t even offer any prospect of meaningful job creation to justify their attack on fundamental investor and market protections."
Over at the Huffington Post, CFA's Barb Roper has more. Excerpt:
"Imagine what Charles Mackay, the author of 1841's "Extraordinary Popular Delusions and the Madness of Crowds," would think of Congress's latest "jobs bill" and, in particular, its proposal to "crowd fund" enterprises through the Internet. If we picture the mania associated with the South Sea Company, Mississippi Company and Dutch tulip bubbles combined with the power of the Web, we can probably get a pretty clear idea. Unfortunately, Mackay's seminal work doesn't appear to be on many congressional reading lists."
In today's Wall Street Journal, she and Lynn Turner, a former Chief Accountant at the SEC and a witness at yesterday's Senate Banking Committee hearing, are sharply critical of the proposals. As many efforts to harm small investors or (small) consumers often are, the proposals are camouflaged behind a bunch of "just helping small business" rhetoric.
By the way, yesterday a jury convicted Allen Stanford (Reuters), probably the biggest -- so far, anyway -- of the mini-Madoffs, of a $7 billion investor scam. He faces 200 years in prison. His lawyers are disappointed and expect to appeal. More from Business Week.
We're teaming up with big restaurant chains to stop the overuse of antibiotics on factory farms. Call on KFC to stop selling meat raised on routine antibiotics.
Your donation supports U.S. PIRG’s work to stand up for consumers on the issues that matter, especially when powerful interests are blocking progress.