JOBSPPT
JOBS:What is JOBS?JOBS is an acronym for Jumpstart Our Business Strengths Act...
JOBS:What is JOBS?JOBS is an acronym for Jumpstart Our Business Strengths Act. It was signed into law by President Obama on April 5, 2012. The Act aims to encourage capital formation in the United States by increasing the flexibility and affordability of initial public offerings (IPOs) while also increasing the number of smaller businesses that go public. JOBS Act did not create any new jobs per se, but it aimed to Jumpstart the business strengths of America's small businesses.Highlights of the JOBS ActAccess to Capital. The JOBS Act relaxes many of the current rules and regulations surrounding initial public offerings (IPOs) in order to make it easier for start-ups and small businesses to go public. This included a new "IPO on-ramp" that allowed emerging growth companies to access capital while providing investors with additional information about the companyGeneral solicitation. The JOBS Act legalized general solicitation for private placementswhich allowed companies to advertise their investment opportunities publicly rather than just targeting accredited investors. This helped to broaden the pool of potential investors and provided more liquidity to the private marketTitle III Crowdfunding. Title III of the JOBS Act created a new form of crowdfunding called Title III Crowdfundingwhich allowed non-accredited investors to participate in small business crowdfunding campaigns for investmentIncreased Transparency. The JOBS Act requires emerging growth companies to provide more information to investorsincluding executive compensation, revenue projections, and other financial data. This additional transparency was designed to give investors more information to make informed decisions and help level the playing field between small caps and larger market capsReduced Filing Burden. The JOBS Act streamlines the registration process for emerging growth companies by reducing the number of financial statements that need to be filed and eliminating some of the disclosure requirements for smaller reporting companiesImproved Liquidity. The JOBS Act includes a number of provisions designed to improve market liquidityincluding allowing market makers to use electronic trading platforms and dark pools to execute trades and create two new types of orders—all-or-none (AON) and fill or kill (FOK)—to improve execution quality and price discoveryGreater Flexibility for Research. The JOBS Act allows broker-dealers and research analysts greater flexibility in publishing research reports anddeleted the requirement that a principal underwriter be involved in such activitiesprovided that a research analyst's independence is not impairedHigher Qualification Standards for Investment Advisers. The JOBS Act raised the qualification standards for investment advisers by requiring them to take an additional qualifying exam and meet heightened supervisory standardsEnhanced Enforcement Powers. The JOBS Act gave the SEC enhanced enforcement powers by allowing it to seek civil penalties for violations of securities laws and gave the SEC increased resources to hire more staff to enforce these lawsHow JOBS Affected Public CompaniesThe JOBS Act had a number of significant effects on public companies:Increased Access to Capital. The new IPO on-ramp allowed more start-ups and small businesses to access capital from the public marketsproviding them with greater opportunities for growth and expansion. This helped create a more vibrant public market for smaller companies seeking capitalGreater Liquidity. Title III Crowdfunding created a new avenue for small businesses to raise capital by allowing non-accredited investors to participate in crowdfunding campaigns. This provided more liquidity in the private markets and gave small businesses additional options for raising capitalGreater Transparency. The JOBS Act required emerging growth companies to provide more information to investorsincluding executive compensation, revenue projections, and other financial data. This additional transparency gave investors more information to make informed decisions and helped level the playing field between small caps and larger market caps. However, some studies have shown that after the implementation of JOBS Act, there was no significant improvement in the liquidity of small-cap stocks or narrowing of the gap between small caps and large capsStreamlined Registration Process. The JOBS Act streamlined the registration process for emerging growth companies by reducing the number of financial statements that need to be filed and eliminating some of the disclosure requirements for smaller reporting companies. This made it easier for smaller companies to go public and saved them time and resources that they would have otherwise spent fulfilling these disclosure requirementsBroader Advertising Options. The general solicitation provision allowed companies to advertise their investment opportunities publiclybroadening the pool of potential investors
