Flashback to April 5, 2012: President Obama puts pen to paper and signs the Jumpstart Our Business Startups Act (the JOBS Act). The President declares that startups and small businesses will “now have access to a big new pool of American investors—namely the American people.” Entrepreneurs rejoice as the potential impacts of this bill could be huge for startups and small businesses. The bill provided a framework and the SEC was handed the reins to draft rules that would govern much of new legislation. The SEC was given a 90-day deadline to implement the JOBS Act.
Flash forward more than 9 months (roughly 270 days later) to January 9, 2013: The SEC has yet to finalize the rules governing the JOBS Act. The closest thing to a final set of rules that we’ve received is proposed rules, which were discussed in the SEC’s August 29 meeting last year. Here’s a rundown of the timeline of events since the JOBS Act was signed into law:
- April 5, 2012: President Obama signs the JOBS Act; Crowdfunding Enthusiasts Celebrate; SEC given 90-day “deadline” to implement rules
- June 28, 2012: SEC Chairwoman, Mary Schapiro, admits the deadline is “not feasible” and states that a more realistic deadline is December 31, 2012.
- July 4, 2012: the 90-day deadline passes without any rules passed by the SEC.
- August 29, 2012: The SEC issues proposed rules for Title II of the JOBS Act (the lift of the ban on general solicitation)
Since August 29, the SEC has been fairly silent on implementing the JOBS Act. Recently, the FINRA Board of Governors met and discussed creating a form for potential funding portals to fill out and submit information to FINRA. This at least signals that crowdfunding, and online funding in general, is on the radar of financial industry regulators.
So who’s to blame here? Well, there’s plenty of blame to go around. The SEC failed to meet its deadlines. Congress passed a law that requires an already busy government agency to implement rules. Perhaps the SEC could have moved quicker on implementing rules. On the other hand, if Congress was deeply concerned with an expedited time frame for the JOBS Act, it could have written a more robust, self-executing, i.e. effective once the President signed the bill, piece of legislation. We know that passing legislation or rule-making is never easy (or fast). But we’re still hopeful that progress will be made and we will see the JOBS Act implemented sooner rather than later.