Slow-Walking The Jobs ACT

Matthew Yglesias advocates for the JOBS Act:

But that doesn’t mean nobody is going to crowdfund. It just means the crowdfunding will be done by whole new operations. Fundrise, for example, is a company whose idea is to sell small (as small as $100) shares in urban infill real estate projects to the public. They’ve been doing this thus far through a rather laborious regulatory process, and are very much looking forward to the promulgation of laxer rules that will let them publicize their offerings in a simpler and more effective way. And the whole point here is to too projects that the large pools of money don’t want to do. Initially, at least, you wouldn’t be competing with those big funds. But like anything disruptive, if it works it will grow in scale and sophistication over time to the point where almost nothing is financed by heavily intermediated fee-laden large pools of capital.

He makes the very valid point that there is both promise and danger in the law what he fails to note is that so far there isn’t any law or rather the SEC has declined to issue the regulations which are required to implement the law. describes the slow-walking.

Knowing that it would be necessary for the SEC to promulgate regulations to implement these changes, Congress specifically obligated the SEC to adopt rules promptly. In Section 201 of the Act Congress required the SEC to “revise its rules” with respect to the ban on Regulation D solicitations “not later than 90 days after the enactment of this Act.”

Also, in Section 301 of the Act, Congress required the SEC “not later than 180 days after the enactment of this Act” to issue such rules as may be necessary to carry out the amendments contained in Section 301 of the Act.

Despite these clear instructions, nearly a year after passage of the law, the SEC has failed to implement these regulations. When pushed for an explanation, SEC appointees have suggested that they disagree with the law’s aims and fear that it will harm their “legacy.” (WSJWired).

Does it bother anyone else that the SEC believes it is entitled to pick and choose which laws it has to follow and that it does so on the basis of the perceived “legacy” that its political appointees believe they have?

That article was written on April 1 and since then a new SEC Commissioner, Mary Jo White, has, according to Bloomberg, started to push for implementation. Ms. White committed to to support the initiative during her Senate confirmation hearings, but that doesn’t mean that it’s a done deal. There is considerable uncertainty about the support among other SEC commissioners and inevitably there are advocacy groups lobbying against at least the rule in its current form. Disruption is a hard sell in a bureaucracy dominated by interest groups.




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