Compliance Bits and Pieces – JOBS Act Edition

The Jumpstart Our Business Startups Act is soon to be law. Here is a smattering of post that caught my attention.

In spite of what you may heave heard, the Senate just effectively killed crowdfunding by Alexander J. Davie

The replacement crowdfunding bill is significantly more complex and fraught with liability for issuers. While even the McHenry approach had some degree of complexity, the Merkley version makes it look simple and straightforward in comparison. Here are just a few examples of some of the differences that I think will sink the new crowdfunding law and prevent it from being of any practical use: ….

The “JOBS” Act and the Capital Raising Process (Crowdfunding and the Consequence of Gambling) by J. Robert Brown Jr. in The Race to the Bottom

But in fact, the crowdfunding exemption included in the JOBS Act is not limited to amounts that investors can afford to lose. The provision allows those with an income or net worth of less than $100,000 to invest up to 5% of that amount or $5000 every year. For those with a net worth or annual income above $100,000, they can invest up to 10% of that amount or up to $100,000 during any 12 month period.

The Three Audiences of the JOBS Act by William Carleton

No one can really know for sure, of course, but I would say that the changes made in the Senate to crowdfunding will make crowdfunding and angel financing mutually exclusive. It’s a bit ironic, but Title II of HR 3606 in many ways puts true crowdfunding behind the accredited investor gate, while giving non-accrediteds a new kind of limited offering registration as an alternative to the others (little used) already out there.

Chowing Down On The JOBS Act And Ralston Purina by Keith Paul Bishop in California Corporate and Securities Law blog

Anyone who has studied securities laws has undoubtedly heard of the Supreme Court’s decision in SEC v. Ralston Purina Co., 346 U.S. 119 (1953). In that case, the Supreme Court struggled with the exemption in the Securities Act of 1933 for “transactions by an issuer not involving any public offering” (now in Section 4(2) but then found in Section 4(1)). Yesterday, Congress passed the “Jumpstart Our Business Startups Act“. Assuming that President Obama signs this bill, the JOBS Act will dramatically change the longstanding limitations on private offerings.

Jobs Bill Opens Door to Hedgie Advertising by Juliet Chung in’s Deal Journal

Could pro golfers soon test their skills at the Paulson & Co. Open? Will legions of basketball or hockey fans one day cheer on their home team from the friendly confines of D.E. Shaw Center?

Which Hedge Fund Manager’s TV Commercial Are You Most Looking Forward To? by Matt Levine in NY’s DealBreaker

“I take back whatever mildly negative things I may have said about the JOBS Act, since apparently in addition to making it easier for small startups to rip off investors, it will also make it easier for small hedge funds to rip off investors”

The jumper cables are Coleman Cable 08565 12-Foot Heavy-Duty Booster Cables, 6-Gauge


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