AOIP Sends Letter to Congress in Support of JOBS Act 4.0

The Association of Online Investment Platforms (AOIP) has forwarded a letter to members of Congress in support of the JOBS Act 4.0 legislation.

In the spring of 2022, Republicans on the Senate Banking Committee submitted draft legislation on the 10th Anniversary of the JOBS Act of 2012, labeling the bill the JOBS Act 4.0. The JOBS Act of 2012 was the bipartisan legislation that legalized online capital formation or investment crowdfunding. Three exemptions, Reg A+, Reg CF, and Reg D (506c) were created or updated to enable firms to raise money online from investors. Other aspects of the JOBS Act of 2012 have also been credited with aiding economic growth. Signed into law during the Obama administration, the legislation was heralded as an example of what both parties could do in partnership to support smaller firms and the economy in general. Now, ten year’s later, the economy is stumbling once again and a new economic impact bill, aiding entrepreneurs and innovators may be just what the country needs.

Feedback on the draft legislation was accepted until June 3, 2022 (but they will probably accept more).

When the JOBS Act 4.0 legislation was revealed, Senator Pat Toomey, the Ranking Member on the Senate Banking Committee, stated:

“The JOBS Act helped to revitalize interest in the public markets and spur economic growth, but it is clear significant work remains to be done to give retail investors access to higher returns and ensure American markets remain the deepest and most liquid in the world. The discussion draft we’re releasing today incorporates ideas from entrepreneurs, retail investors, and others, and includes numerous provisions with strong bipartisan support. I look forward to continue working with both Republican and Democrat colleagues on a final product that accelerates economic growth and spurs new job creation across the U.S.”

The legislation incorporates bills that have previously been channeled through Congress but without becoming law. While lengthy, in general, the JOBS Act 4.0 seeks to:

  • Encourage companies to be publicly traded – includes eight initiatives to encourage companies to become public, particularly during earlier growth stages, when investors have the chance to earn the highest returns.
  • Improve the market for private capital – includes six initiatives to reduce costs associated with seeking capital by appropriately tailoring regulations for small businesses.
  • Enhance retail investor access to investment opportunities — includes eight initiatives to prevent retail investors from being excluded from certain investment opportunities.
  • Improve regulatory oversight — includes seven initiatives to enhance investor protection and privacy and to update outdated statutory and regulatory provisions.

Around the time the draft legislation was introduced, David Burton, Senior Fellow in Economic Policy at The Heritage Foundation, noted that the JOBS Act of 2012 substantially improved the laws governing entrepreneurial capital formation having a positive impact on entrepreneurial activity. As for the JOBS Act 4.0, Burton believes that additional statutory changes would improve entrepreneurs’ access to capital and more reforms to securities laws could substantially improve the regulatory environment for both entrepreneurs and larger public companies and the returns to investors.

Burton wrote a comprehensive explanation of the JOBS Act 4.0 for CI this past May. He believes that considered as a whole, the JOBS Act 4.0 can be expected to have positive impact comparable to that of the original JOBS Act.

Signed by AOIP President, Youngro Lee, the states that the comments:

“…have been prepared based on actual, extensive experiences of some of the leading online investment platforms in the US that have successfully utilized existing private securities offering exemptions and deeply understand the difficulties and challenges associated with the current exemptions. We sincerely believe that codifying any of these suggestions would greatly facilitate broader adoption of private securities offering exemptions for the benefit of small businesses and everyday investors.”

Maxwell Rich, Deputy General Counsel, VP of Regulatory Affairs, Secretary of Republic, and member of AOIP, told CI:

“We highly encourage Congress to pass the JOBS Act 4.0, as many of the provisions will further help private companies raise capital, allow investors to further diversify their portfolios and provides paths to liquidity for both, as we enter a fractious economic environment. A decade ago, when Congress first passed the JOBS Act of 2012, the success and viability of expanding access to capital for private companies through forums that allowed broad public (rather than institutional) participation was the great unknown, full of promise and fear regarding investor protection. Now, after six years of experience, this great but slow-moving experiment, one year of which included some necessary and proper liberalizations brought about by the Commission’s Harmonization Release, Congress has the opportunity to further bolster this avenue, which has earned the right by producing the desired results while providing robust consumer protections. Crowdfunding, specifically, and the JOBS Acts rules generally, have led to a democratization of capital formation, but like, democracy, these rules are a living thing which requires continual tweaks and support to realize their fullest potential.”

The letter, explains:

“The AOIP hopes that policymakers could strive to make the very best deals accessible to smaller investors and not just the wealthy who have easier routes to investing in private companies. This goal is a bi-partisan mission that seeks to create wealth and success for all while addressing the needs of underserved constituencies. Specifically, and with respect to the JOBS Act 4.0,” adding that; “an innovation-driven economy that creates jobs and boosts wealth for entrepreneurs and investors is only achievable with a robust startup and small business ecosystem.”

So will the JOBS Act 4.0 become law?

Expectations are for the legislation to garner more scrutiny this coming fall. There is significant hope that both sides of the aisle can join in supporting smaller firms, and entrepreneurs while providing greater access to opportunities for retail investors. None of the legislation, or at least little of it, should be deemed controversial. We will know more later in the year.

The letter is available here.


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