Obama Opens Door to Fraud by Signing (No) JOBS Act
Thursday, April 12, 2012
Jeffrey Immelt and Barack Obama (AP Photo)
Legislation intended to “jumpstart” job creation may instead do more to allow fraud on Wall Street.
Developed by the White House, and signed by President Barack Obama on April 5, the “Jumpstart Our Business Startups Act” (or JOBS Act) swept through both houses of Congress with bipartisan support, 380-41 in the House of Representatives and 73-26 in the Senate.
The act will make it easier for startup companies, especially those in Silicon Valley, to attract capital by allowing them to skip independent audits for the first five years after they go public.
The problem with this provision, writes Matt Taibbi at Rolling Stone, is that it could likely “encourage fraud in the stock markets.”
“Even worse, the JOBS Act, incredibly, will allow executives to give ‘pre-prospectus’ presentations to investors using PowerPoint and other tools in which they will not be held liable for misrepresentations,” Taibbi adds.
Eliot Spitzer, former New York attorney general, called the JOBS Act “a bad sequel to a bad movie.”
“It shouldn’t be called the JOBS Act, it should be called the Bring Fraud Back to Wall Street Act,” Spitzer said.
Credit, or blame, for the JOBS Act goes largely to Obama. While Republicans in Congress supported it, the legislation was the “brainchild” of the President’s Council on Jobs and Competitiveness, which is headed by General Electric CEO Jeffrey Immelt and consists of 18 corporate CEOs and investment executives, two academics and two labor leaders.
Some Democratic leaders were not happy with the bill. Sen. Carl Levin of Michigan warned, “We are about to embark upon the most sweeping deregulatory effort and assault on investor protection in decades.…It will allow vast new opportunities for fraud and abuse in capital markets.” Majority Whip Dick Durbin of Illinois added that, “We will rue the day that we rammed this through the House and Senate.”
All of the 67 members of Congress who voted against the bill were members of the president’s party.
-Noel Brinkerhoff, David Wallechinsky
To Learn More:
Why Obama's JOBS Act Couldn't Suck Worse (by Matt Taibbi, Rolling Stone)
Wall Street Examines Fine Print in a Bill for Start-Ups (by Susanne Craig and Ben Protess, New York Times)
Obama JOBS Act Leaves Labor Fuming In Democratic Feud (by Zach Carter and Ryan Grim, Huffington Post)
Senate Passes JOBS Act (by Humberto Sanchez, Roll Call)
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