Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, March 4, 2013

Steven Rattner on the JOBS Act: Bad Law!

Law professors have written thoughtful criticisms warning about the dangers created by the JOBS Act ever since its enactment, and so far as I know, nobody outside the academy has listened.  So I am interested to see if Steven Rattner's op-ed in today's New York Times will get more attention.  Entitled "A Sneaky Way to Deregulate," he aptly describes the legislation as having "little to do with employment; it’s a hodgepodge of provisions that together constitute the greatest loosening of securities regulation in modern history." And he doesn't think that's a good thing!

 He describes the "crowdfunding" provisions -- which allow start-up businesses to solicit funds from unsophisticated investors -- as "pure folly. Buy a lottery ticket instead. Your chance of winning is likely to be higher."

He finds other provisions "less terrifying but still problematic," including the provision that allows private equity and hedge funds to advertise.  Since the successful funds have no trouble raising capital without advertising, he wagers that the funds that will resort to advertising are firms that sophisticated institutional investors wouldn't consider investing in.

Rattner concludes that the jobs created by the JOBS Act may be for lawyers "to clean up the mess that it will create."

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