Laws don't often get their own parties. But for the
irresistibly named Jumpstart Our Business Startups (JOBS) Act, President Obama held a rare public ceremony in the
White House's Rose Garden in its honor. Even more notably, this party was quite
bipartisan-Republican House Majority Leader Eric Cantor stood right next to
Obama as he signed the legislation. Since that day in April 2012, the most
common criticism about the JOBS Act has been that it doesn't really exist yet.
Many provisions, such as the more controversial element of the act allowing
companies to raise financing through public "crowdfunding," are still undefined
by the SEC. Other sections remain untested.
Now, almost a year after it was signed into law, the JOBS
Act has, at least temporarily, quieted many of its critics. That's because its
primary goal of giving some companies an easier path to completing an initial
public offering (IPO) seems to be gaining traction.
Reasons for Popularity and Optimism
How so? First of all, the JOBS Act provisions are
popular. Two-thirds of the U.S. exchange-traded IPOs in 2012 were by companies
taking advantage of a new category of equity issuer established by the act: the
"emerging growth company" (EGC). This designation provides options for lighter
regulation such as exemptions from certain provisions of the
Second, in a year that was considered a poor one for public offerings, marred by looming fiscal
cliffs (the only kind) and overhyped social media IPOs (the only kind), shares
of companies that went public under the JOBS Act outperformed those of
companies that took the more conventional route. That has prompted growing
optimism that 2013 may be a turnaround year for IPOs and new
No matter how the year unfolds, one thing is certain. As
outgoing SEC Chair Elisse Walter acknowledged
recently, the JOBS Act signals a "seismic shift in the way companies,
particularly small and emerging ones, raise capital and how individual
investors participate in that process."
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