NASAA Report Criticizes JOBS Act 4.0 Proposals, Recommends Changes

In a recent report, the North American Securities Administrators Association ("NASAA") urged Congress to oppose the proposed JOBS Act 4.0 legislation asserting that many of its provisions would adversely impact the capital markets for public securities offerings. NASAA also provided a series of recommendations to help revive global confidence in capital markets.

NASAA stated that the act as a whole, and many of the proposed bills contained within it would:

• impede regulatory oversight, corporate governance and accountability mechanisms due to disclosure requirements for private companies;

• undermine the ability of securities regulators to strengthen public markets due to a lack of public disclosure;

• decrease transparency and increase the likelihood of fraud and misconduct due to the inability to accurately price a company's shares or evaluate its risks; and

• incentivize companies to stay private, while providing exemptions from registration, which hinders the policy goal of expanding public markets.

NASAA outlined several recommendations for the JOBS Act 4.0 proposals, which included:

• expressing support for "Promoting Opportunities for Non-Traditional Capital Formation Act," which expands the SEC Office of the Advocate for Small Business Capital Formation;

• supporting the "Private Markets Transparency and Accountability Act," which extends reporting and disclosure requirements for companies with large valuations or high employee counts;

• urging the SEC to collect additional data about private offerings and conduct studies of the capital markets;

• calling on the SEC to amend the definition of an "accredited investor" by raising the current income and net worth thresholds, while excluding certain assets, and by creating metrics to measure an investor's sophistication;

• opposing the "Unlocking Capital for Small Businesses Act," the "Small Entrepreneurs' Empowerment and Development Act," the "Facilitating Main Street Offerings Act" and the "Improving Crowdfunding Opportunities Act";

• supporting the "Tracking Bad Actors Act," which would require the development of a federal database of bad actors in the financial industry; and

• requesting an update of the SEC's civil penalties statutes to increase monetary penalties.