AOIP Sent US Congress a Letter Supporting JOBS Act 4.0

In order to show their support for the JOBS Act 4.0 legislation, the Association of Online Investment Platforms (AOIP) has written a letter that has been sent to members of Congress.

In the spring of 2022, Republicans serving on the Senate Banking Committee presented a draft law that they referred to as the JOBS Act 4.0. The bill was intended to commemorate the 10th anniversary of the passage of the JOBS Act in 2012. The Jobs Act of 2012 was the piece of legislation that was passed with support from both the Republican and Democratic parties and authorized the practice of investment crowdsourcing online.

A total of three exemptions—Reg A+, Reg CF, and Reg D (506c)—have been developed or revised to make it possible for businesses to solicit financial backing from internet investors. It has been suggested that the JOBS Act of 2012 contributed to the expansion of the economy in other ways as well. The legislation, which was passed into law during the Obama administration and hailed as an example of what both parties might achieve in partnership to promote smaller businesses and the economy in general, was signed into law during that administration. Now, ten years later, the economy is once again faltering, and a new economic impact law that assists entrepreneurs and innovators may be exactly what the country needs to get it back on track.

Until June 3, 2022, comments on the proposed piece of legislation could be submitted (but they will probably accept more).

Senator Pat Toomey, who holds the position of Ranking Member on the Senate Banking Committee, made the following statement in response to the introduction of the JOBS Act 4.0 legislation:

“The JOBS Act helped to revitalize interest in the public markets and spur economic growth, but it is clear significant work remains to be done to give retail investors access to higher returns and ensure American markets remain the deepest and most liquid in the world. The discussion draft we’re releasing today incorporates ideas from entrepreneurs, retail investors, and others, and includes numerous provisions with strong bipartisan support. I look forward to continue working with both Republican and Democrat colleagues on a final product that accelerates economic growth and spurs new job creation across the U.S.”

David Burton, Senior Fellow in Economic Policy at The Heritage Foundation, made the observation around the time that the draft legislation was presented that the JOBS Act of 2012 substantially improved the laws governing entrepreneurial capital formation, which had a positive impact on entrepreneurial activity. Concerning the JOBS Act 4.0, Burton is of the opinion that additional statutory changes would improve the access to capital that entrepreneurs have, and that additional reforms to securities laws could significantly improve the regulatory environment for both entrepreneurs and larger public companies, as well as the returns that investors receive.

In May of this year, Burton provided CI with an in-depth analysis that he had written on the JOBS Act 4.0. He is of the opinion that when the JOBS Act 4.0 is examined in its whole, it can be anticipated to have a beneficial impact that is comparable to that of the original JOBS Act.

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The document, which was signed by Youngro Lee, the President of the AOIP, claims that the comments:

“…have been prepared based on actual, extensive experiences of some of the leading online investment platforms in the US that have successfully utilized existing private securities offering exemptions and deeply understand the difficulties and challenges associated with the current exemptions. We sincerely believe that codifying any of these suggestions would greatly facilitate broader adoption of private securities offering exemptions for the benefit of small businesses and everyday investors.”

According to statements made by Maxwell Rich, Deputy General Counsel, Vice President of Regulatory Affairs, Secretary of Republic, and member of AOIP:

“We highly encourage Congress to pass the JOBS Act 4.0, as many of the provisions will further help private companies raise capital, allow investors to further diversify their portfolios and provides paths to liquidity for both, as we enter a fractious economic environment. A decade ago, when Congress first passed the JOBS Act of 2012, the success and viability of expanding access to capital for private companies through forums that allowed broad public (rather than institutional) participation was the great unknown, full of promise and fear regarding investor protection. Now, after six years of experience, this great but slow-moving experiment, one year of which included some necessary and proper liberalizations brought about by the Commission’s Harmonization Release, Congress has the opportunity to further bolster this avenue, which has earned the right by producing the desired results while providing robust consumer protections. Crowdfunding, specifically, and the JOBS Acts rules generally, have led to a democratization of capital formation, but like, democracy, these rules are a living thing which requires continual tweaks and support to realize their fullest potential.”

The letter elaborates as follows:

“The AOIP hopes that policymakers could strive to make the very best deals accessible to smaller investors and not just the wealthy who have easier routes to investing in private companies. This goal is a bi-partisan mission that seeks to create wealth and success for all while addressing the needs of underserved constituencies. Specifically, and with respect to the JOBS Act 4.0,” adding that; “an innovation-driven economy that creates jobs and boosts wealth for entrepreneurs and investors is only achievable with a robust startup and small business ecosystem.”

Is it possible that the JOBS Act 4.0 will be passed into law?

This upcoming fall, it is anticipated that the law will receive a greater degree of scrutiny. There is reason to believe that politicians on both sides of the aisle will be able to work together to promote smaller businesses and entrepreneurs while also expanding access to investment options for retail investors. It is quite unlikely that any of the law, or even a significant portion of it, will be regarded as problematic.