JOBS Act eases securities‐law regulation of smaller companies

Abstract

Purpose

The purpose of this paper is to review the principal provisions of the Jumpstart Our Business Startups (JOBS) Act, which was enacted in April 2012 and represents significant legislative reform of securities regulation in the USA.

Design/methodology/approach

The paper examines the modified US securities regulatory regime introduced for initial public offerings and SEC reporting by a newly designated class of smaller securities issuers referred to as “emerging growth companies” and summarizes reforms to the regulation of capital‐raising transactions by small issuers and other companies that are intended to facilitate the creation of new jobs by easing regulatory burdens.

Findings

The JOBS Act should meet its objective of providing emerging growth companies, at reduced cost, with an orderly transition from a private existence with relatively few securities‐law concerns to a public one with numerous compliance obligations. Companies also will have greater opportunities to access capital through the availability of additional exemptions from Securities Act registration and the elimination of some restrictions on offering‐related communications with investors. The relaxation or elimination of long‐accepted methods for minimizing fraud and abuse in securities offerings, however, could result in a significant increase in investment scams and other wrongdoing.

Originality/value

The paper provides expert guidance from experienced financial services lawyers.

Citation

Parrino, R.J. and Romeo, P.J. (2012), "JOBS Act eases securities‐law regulation of smaller companies", Journal of Investment Compliance, Vol. 13 No. 3, pp. 27-35. https://doi.org/10.1108/15285811211266083