The JOBS Act was signed into law last week with bipartisan support and I was thrilled. Republicans and Democrats never agree on anything, yet here they were, acting as one voice with not only this piece of legislation, but with the STOCK Act as well. However, the New York Times reported today that Mary Schapiro of the SEC as well as other regulators are wary about the JOBS Act. Ms. Schapiro believes that investors will not be as protected under the new rules.
This argument resonates with me. The distinction between research analysis and investment banking will be weakened, and I worry that the investor will suffer as a result. Corporate governance will be more difficult to maintain. The last thing a business would want would be for its research analysts to provide recommendations based on the needs of the investment bankers. Once that happens, all credibility is lost.
But who knows? Maybe this will be less of an issue with smaller firms. What do all of you think? Not only do I want to know, the SEC wants to pick your brain as well.
BIG BROTHER HAS ARRIVED GRAB YOUR GUNS AND PUT ON YOUR TIN FOIL HATS PROTECT YOUR BRAIN WAVES
There's a number of P2P businesses in the UK that may soon be replicable in the US on the back of this legistlation:
zopa ratesetter fundingcircle
I wonder whether we will see P2P debt funding regulations relaxed in the same way that the JOBS act has done for equity funding?
Mnkybiznis, thanks for your post! So how well is peer to peer financing working in the UK? I'm assuming the risk of borrowers defaulting on the loans is so high that regulations are in place to make this less likely to happen.
The P2P business is showing good trends in the UK. Default rates are very low as the P2P businesses only focus on high credit worthy borrowers (about the top 15%) - RaeSetter has created a provision fund that ensures zero rate of default.
Interesting article in todays FT showing John Mack has joined the Board of the Lending Club
http://www.ft.com/cms/s/0/806acf88-8428-11e1-9d54-00144feab49a.html#axz…
It appears that US legislation is set to open up this market in the next few months. Regulation requiring SEC registration is the reason many UK firms have stayed out of the US market to date.
From a HF perspective, HFs will be allowed to openly market now. It could change the industry forever, or it could mean nothing.. will be interesting nonetheless..
CFA Institute: The JOBS Act is Bad For Investors (Originally Posted: 03/21/2012)
http://baselinescenario.com/2012/03/20/cfa-institute-against-the-jobs-b…
Eliot Spitzer's view: http://www.slate.com/articles/news_and_politics/the_best_policy/2012/03…
http://www.forbes.com/sites/jjcolao/2012/03/21/jobs-act/
So is this bill going to help boost economic growth and create jobs or is it going to lead to less investor protections and greater amounts of fraud?
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