Great piece by Rob Schmidt and Phil Mattingly at Bloomberg News looking at the bigger story behind passage of the JOBS Act.
An update – How Washington Helped Businesses and Entrepreneurs Succeed—- in an Election Year!
A brief update to my December blog post…
When the House and Senate broke for their two week April work period, they achieved something that few thought possible – a Rose Garden signing by President Obama of a major piece of bipartisan legislation – the JOBS Act (see picture below). Last week the President was flanked by Democrats, Republicans, and entrepreneurs, and in his remarks he called the new law a “game changer.” He’s right.
Allowing better access to capital for entrepreneurs and growing companies is a critical part of getting America’s businesses and economy back on track. The JOBS Act has something for everyone, as the link here illustrates.
The new law sets some good rules of the road for a popular new way for entrepreneurs with few if any employees to find dollars through crowdfunding. Under the law, startups can raise up to $1 million per year from thousands of small-dollar investors through SEC-registered, web-based platforms. Upon passage of the law, a group of crowdfunding companies have agreed to work with regulators to create an “Investors’ Bill of Rights.” The JOBS Act also adjusts some legacy regulations to allow more established businesses to solicit funds broadly, although it insures that only sophisticated investors can make those riskier investments.
The new law also allows both new startups and well-established companies to better manage employee hiring and compensation structures. This adjustment to the SEC’s 500 shareholder threshold means that a company doesn’t have to count employees against its shareholder cap – which could force a company to “go public” well before it is ready to. It also increases the overall shareholder cap to 2,000 (with a maximum of 500 un-accredited investors).
It will allow smaller companies to better utilize the SEC’s “Regulation A” exemption by raising the capital raising threshold to $50 million from $5 million. And it will provide the much-talked about, “IPO On-Ramp,” giving newer companies a more gradual introduction to the public markets. Qualified companies would have to contend with less red tape and would be able to delay compliance (up to five years) with some IPO requirements for disclosure and auditing.
For growing companies, going public shouldn’t be like turning on a light switch. There should be a process to acclimate employees, entrepreneurs, and investors to the many benefits and costs of the public markets. Companies that have grown quickly, whether they are high tech or Main Street (or both) should not be punished or hamstrung because of outdated rules and regulations. The JOBS Act should help to maintain investor protections while allowing companies to innovate, thrive, and create JOBS.
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The top federal prosecutor in Manhattan, Preet Bharara, announced some big mortgage fraud charges in New York on Wednesday, accusing three former high-level employees of Credit Suisse with jacking up the book value of bundled housing loans they were selling. In one quarter alone, Bharara charges, they overstated the value by $540 million, boosting a top […]
The 2012 GOP Iowa Caucus, through “blue-colored” glasses…
This year’s presidential primary season is much more like 2004 than 2000 or 2008. Some of you (Democrats and Independents particularly) may need to find some way to relate to the current media frenzy in advance of tonight’s Republican Caucus in Iowa. So here’s a little look back that might help handicap the 2012 GOP primary race and look at the candidates through “blue-colored” glasses, circa 2004.
No one saw Sen. John Kerrycoming in Iowa when he scored a huge victory based largely on electability. Gov. Mitt Romney no longer has the same element of surprise going for him, but if there was a Twitter-verse or Facebook in 2004, maybe Kerry’s big win would have been obvious too. They were both elected by the progressive, Commonwealth of Massachusetts, both have amazing heads of hair, and both shared MANY of the same policy positions until recently. Look for Mitt to score a solid win in the first Caucus and continue to roll in New Hampshire.
The next best and closest comparison for candidates, but perhaps not order of finish is Rep. Newt Gingrich and Sen. John Edwards. Both men can be exciting orators, policy wonks, and have Southern appeal, but both have also had some marital troubles and ego issues. Gingrich has recently slipped in polls, but could still score a second or third place finish, which would be a coup for a campaign that imploded in early 2011. While Gingrich may not be a willing number two on a GOP ticket, he, like Edwards (pre-scandal) would probably make a strong choice.
Gov. Howard Dean captivated so many, so early, with meet-ups and an intense email operation – but finished a distant third place in the Iowa caucus. Rep. Ron Paul may be a very apt pairing here for those reasons and more – grassroots organization, broad fundraising base, etc. We’ll see if the Dean Scream turns into the Paul’s Bawl tonight…
Rep. Dick Gephardt, for whom I worked in the late 90’s, spent more time in Iowa over the course of his life than most pols in the 2004 matchup, but finished a very disappointing fourth in 2004. Even though most picked him early as the frontrunner in the Iowa matchup because of his strong showing in 1988. Also a member of the House from neighboring Minnesota, Rep. Michele Bachman, an Iowa native, is in a similar boat and probably peaked way too soon to finish in the top three.
Rep. Dennis Kucinich and Sen. Rick Santorum – not many obvious similarities here. However, both really revved up the fringe bases in their respective parties and fell short on the fundraising. Santorum seems to have the advantage going into tonight — look for him to do far better than Kucinich, but he still might not crack the top three.
Finally, General Wes Clark, the former Supreme Allied Commander, was a godsend for Democrats who were perceived as weak on foreign policy and national security issues. His campaign stumbled early and didn’t take off in time to make the impact it could have. Similarly, Gov. Rick Perry and Gov. Jon Huntsman are most like the General and will also be bringing up the rear of tonight’s caucus. While both could have the cash and qualifications to compete in New Hampshire and beyond, it will be an uphill climb.
So enjoy tonight! If history and this Caucus mash-up hold up, we’ll be watching an Obama-Romney matchup this fall (results from 2004 Democratic Caucus and my predictions for this year’s GOP Iowa Caucus are below).
Results from the Iowa Democratic caucuses in 2004 (Candidate - Percentage):
John Kerry 37.6%
John Edwards 31.8%
Howard Dean 18.0%
Richard Gephardt 10.6%
Dennis Kucinich 1.3%
Wesley Clark 0.0%
Predictions for the Iowa Republican Caucus in 2012 (Candidate – Percentage):
Mitt Romney 25%
Ron Paul 21%
Newt Gingrich 20%
Rick Santorum 19%
Michele Bachman 8%
Rick Perry 6%
Jon Huntsman 0%
What Dodd-Frank Forgot and Washington Can Still Do in an Election Year: Help American Businesses and Entrepreneurs Succeed
Few overhauls of our nation’s financial regulatory system have been bigger and more comprehensive than the Dodd-Frank Act, which was enacted in the summer of 2010. While stakeholders may disagree over the details, few could argue that federal regulations have been adequately updated to keep pace with technological and financial innovations. From online stock trading to new kinds of mortgages to financing a home, the financial services world is not your grandfather’s community bank anymore.
But much like the childhood story of Goldilocks and the three bears, there are differing views on whether this new set of laws and regulations is too hot or too cold for financial markets and consumers. Some are not as concerned about the temperature of the Dodd-Frank porridge as they are about its lack of sweeteners for Main Street businesses and entrepreneurs. The brown sugar and raisins that many American businesses have been looking for come in the form of updating regulations that crimp hiring at fast-growing and well-established firms alike; constricting capital formation for technology startups; and saddling many companies with a one-size-fits-all regulatory regime.
The changes in our economy have been massive since 1933 or 1964 — years when many of these laws and regulations were implemented. Private companies are taking much longer to “go public,” small public companies can languish in the public markets without stock research reports, stock brokers no longer identify diamonds in the rough for retail investors, and investors hold stocks for far less time than they once did. As a result of these and many other changes in the public markets, only the very largest companies are able to go public and thrive. Weighty studies and papers by Grant Thornton, the Progressive Policy Institute and the President’s IPO Task Force have examined some of the causes of and suggested fixes for the problems that exist in the capital.
Along those lines, there a lot of good reasons for entrepreneurs, well-established private companies, and other technology and financial innovators to find a seat at Washington’s policy-making table in 2012. There are a number of bipartisan measures that are being considered by both the House and the Senate, and are being championed by the White House. These measures would address the challenges that American businesses may be facing due to existing law as well as in the capital markets. They would also cut through some of the regulatory red tape at the Securities and Exchange Commission. While some problems in the capital markets are clearly systemic – far fewer initial public offerings this decade than the previous decades, because of reduced access to capital for startups – there are others born out of obsolete or burdensome regulations.
One of the obsolete regulations routinely cited is the 500 shareholder rule. It was enacted by the Securities and Exchange Commission in 1964 – the same year that President Johnson signed the Civil Rights Act and Major League Baseball first experimented with a free agent draft. The SEC implemented this rule, which requires companies that have exceeded the shareholder count to essentially become publicly-reporting entities, in order to protect investors. A bipartisan bill recently passed the House Financial Services Committee that would exempt current and former employees from the shareholder count and allow the increase of the overall count. This would give small companies more flexibility in hiring and attracting broader bases of institutional and accredited investors (a similar bill was introduced in the Senate recently, as well). The bills have received tremendous support from some of the oldest private companies and newest high tech startups in America, the stock exchanges, and venture and angel investors.
Another bipartisan bill, which intends to make it easier for smaller companies to launch initial public offerings by easing certain securities regulations, was introduced in both the House and Senate this month. The bill seeks to exempt certain smaller companies that are planning initial public offerings from burdensome securities regulations. It would loosen auditing requirements, potentially increase independent analyst research, expand the range of pre-IPO communications with institutional investors, and exempt repeated “say on pay” votes for shareholders. The bill defines a new class of issuers, emerging growth companies, which have less than $1 billion in annual revenue at the time of SEC registration and less than $700 million in public shares. The bill has significant support from the White House, venture capitalists and other important stakeholders.
We have only scratched the surface of the issues and bills in the capital formation space. These issues are complicated. However, they’re not impossible for policymakers to wrap their heads around as we have seen from the slew of bipartisan bills that have been introduced — and in some cases, passed — by the House this year and the number of hearings and markups ongoing in both chambers. Many experts consider presidential election years a dead zone for legislating or getting anything substantial done in Washington. But if the stars align on these capital formation and job creation bills, President Obama could be signing some bills in 2012 with congressional Democrats and Republicans looking over his shoulder.
the giffords shooting… an opportunity to provide better safety and security for members of Congress
In the wake of the tragic Gabby Giffords shooting in Arizona, why can’t the US Capitol Police train local police to provide security to Representatives across US?
Should Representatives be walled off from their constituents? Absolutely not. Should they and their staffs be forced to defend themselves from lunatics with guns at a town hall meeting or Congress on your Corner? Absolutely not.
It is unrealistic to expect the USCP or the Secret Service (or even the US Marshals) to provide security to 435 members of Congress. However, local police forces could take turns committing one or two officers a weekend or week to protect their district’s elected US Representative. Most members represent a number of local police departments (some represent dozens), so the resources and time required of any one department to carry out this new assignment would not be unbearable. Many departments send their officers for special training in a variety of law enforcement areas (terrorism/homeland security among the highest priorities for special training). A high level program to protect US Representatives could provide training for selected local law enforcement jointly by the very best - the US Secret Service and the Capitol Police force.
This tragic shooting in Arizona should be treated as an opportunity to provide better safety and security for members of Congress and their staffs while they are doing their jobs back home.
