Crowdfund Insider | David R. Burton | May 16, 2022

Passed with large bipartisan majorities and signed into law by President Obama, the 2012 JOBS Act was a bipartisan achievement of consequence. The JOBS Act substantially improved the laws governing entrepreneurial capital formation and has had a measurable positive impact on entrepreneurial capital formation.

On the 10^th anniversary of the JOBS Act, Senate Banking Committee Republicans under Sen. Toomey’s leadership, have released a discussion draft of new legislation, called JOBS Act 4.0, that would considerably improve the regulatory environment for entrepreneurs seeking to raise capital. In all, it contains 29 discrete pieces of legislation, many of which have also been introduced as stand-alone legislation. The package, considered as a whole, can be expected to have a very positive impact comparable to that of the original JOBS Act. These bills were discussed at an April 5^th Senate Banking Committee hearing at which the author testified.

Sen. Toomey is seeking public comments on how the draft legislation may be improved by June 3, 2020. Comments may be provided by email to submissions@banking.senate.gov.

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The discussion draft is divided into four titles:

Title I—Encouraging Companies to be Publicly Traded (8 sections)

Title II—Improving the Market for Private Capital (6 sections)

Title III—Enhancing Retail Investor Access to Investment Opportunities (8 sections)

Title IV—Improving Regulatory Oversight (7 sections)

The discussion below addresses 15 of the bills included in the discussion draft. All bill numbers refer to the 117^th Congress unless otherwise noted.

The Impact of the Original JOBS Act

In all, as the tables below show, JOBS Act offerings amounted to about three to seven percent of the private capital raised in the U.S. in 2018 and 2019. The Title I Emerging Growth Company (EGC) provisions account for additional capital raised (although this capital is raised in the public market). The graph below showing the number of listed companies is quite remarkable. The number of public companies was in a free fall prior to the JOBS Act. Now that number is basically flat. The number of IPOs in the nine years after the JOBS Act has increased by 43 percent relative to the nine years before the JOBS Act and the amount raised has increased by 57 percent. Precisely how much of that is attributable to Title I is not clear but roughly four-fifths of issuers conducting IPOs appear to be taking advantage of EGC status.

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What’s Included in the Jobs Act 4.0

• Sec. 102: Emerging Growth Company Extension Act.
• Sec. 103: Dodd-Frank Material Disclosure Improvement Act (S.3923).
• Sec. 107: The Main Street Growth Act (S.3097).
• Sec. 202: Expanding American Entrepreneurship Act (S.3976).
• Sec 204: Small Entrepreneurs’ Empowerment and Development (SEED) Act (S.3939).
• Sec. 205: Unlocking Capital for Small Businesses Act (S.3922).
• Sec. 206: Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act (S.3391).
• Sec. 301: Small Business Audit Correction Act (H.R.8983 S.2724, 116^th Congress).
• Sec. 303: Gig Worker Equity Compensation Act (S.3931).
• Sec. 304: – Increasing Investor Opportunities Act (S.3948).
• Sec. 305: Improving Crowdfunding Opportunities Act (S.3967).
• Sec. 306: Equal Opportunity for all Investors Act (S.3921).
• Sec. 307: Facilitating Main Street Offerings Act (S.3966).
• Sec. 404: Protecting Investors’ Personally Identifiable Information Act (S.1209).
• Sec. 405: Administrative Enforcement Fairness Act (S.3930).
• Additional Proposals Relating to Entrepreneurial Capital Formation That Should be Added to JOBS Act 4.0.

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