Obama Signs Wall Street/Corporate Backed "Jobs Act": A “Recipe for Fraud” And Job Destruction

[Better Believe It]

26. Bloomberg Editorial: "the JOBS ACT goes too far"

Small Biz Jobs Act Is a Bipartisan Bridge Too Far
By the Editors
March 18, 2012


.... the JOBS Act goes too far. It would gut many of the investor protections established just a decade ago in the 2002 Sarbanes-Oxley law. A wave of accounting scandals -- think Enron and WorldCom -- had destroyed the nest eggs of millions of Americans and upended investor confidence in Wall Street. The relief would extend beyond small businesses and apply to more than 90 percent of companies that go public.

At the center of the package is a new class of emerging growth companies, defined as those with as much as $1 billion in annual revenue, which would be exempt from a host of disclosure, reporting and governance rules. These companies would be able to operate for up to five years without an independent test of their internal controls -- the checks and balances that help companies prevent outright fraud and costly accounting mistakes.

Perhaps most disappointing, the bill rolls back rules meant to prevent analysts from misleading investors by talking up stocks simply to win investment banking business. Such conflicts of interest were banned in 2003, after federal and state investigations revealed analysts were privately deriding stocks they were publicly touting and failing to disclose conflicts.

There is room to improve small-business rules, but Congress should tread carefully. History is full of examples of legislation enacted in the name of deregulation, only to have it backfire. The 1999 Gramm-Leach-Bliley Act, which ended the Depression-era ban against mixing investment and commercial banking, and the 2000 Commodity Futures Modernization Act, which allowed explosive, but unregulated, growth in over-the-counter derivatives, are two. Both laws helped set the stage for the 2008 financial collapse.

Read the full editorial at:

http://www.bloomberg.com/news/2012-03-18/small-biz-jobs-act-is-a-bipartisan-bridge-too-far-view.html