WSJ hits again with a piece on the JOBS act, by Emily Chasan, who notes the act “was supposed to be about clearing away regulation to help young companies create jobs.” Once again, Congress pretends the government “creates” jobs.
The kind of companies this measure is helping are: “‘Special-purpose acquisition companies’ and ‘blank check’ companies, basically empty shells with almost no employees that are used in mergers or as a backdoor route to U.S. stock listings, [and they] have been quick to identify themselves in regulatory filings as ’emerging growth companies.'”
The WSJ says the Act doesn’t require these companies to “… comply with the Sarbanes-Oxley Act’s requirements that auditors review their internal controls. It also allows them to make fewer financial disclosures, use a new, confidential SEC review process for IPOs and lets their bankers communicate more freely with potential investors. The confidential reviews are designed to let companies sort out any differences with the SEC behind closed doors.”
There are legitimate companies filing under this act, but we predict that many will get into some kind of trouble, since there is so little transparency left for investors to rely on.
But we told you about this already. This is what IFO said in a brief April 7 note on the Act, which was promoted as a way to let crowdfunding promote small, emerging technology companies:
Crowdfunding prediction – The new JOBS Act signed with great fanfare as a – gasp! – bipartisan effort now makes it easier for small companies to get investment funding. Let us also say this opens the door for more fraud. Nope, we haven’t read the bill yet. May not read it ever. We just smell a rat.
If you want, you can go ahead and read the article. If you want to save time, read Investing for One.