Legislation that is expected to be signed in to law by President Obama this month to help start-up businesses is being scrutinised and hotly debated by Wall Street and lawyers alike.
The JOBS Act - Jumpstart Our Business Startups – contains clauses which will undo landmark legislation enacted almost ten years ago which sought to prevent fraud within the investment world.
The law passed in 2003, according to The New York Times’ DealBook, ‘barred any communication between bankers and analysts unless accompanied by a compliance officer’, in order to prevent bankers influencing the research.
The JOBS Act will ease some of these restrictions in relation to smaller companies and start-ups. Wall Street lawyers are now scrutinising the new law to see if their clients can benefit. According to DealBook, law firm Davis Polk, wrote in a client note that the Act represented ‘the most significant legislative loosening in memory of restrictions around the I.P.O. process and public company reporting obligations’.
However, not everyone is happy about the new provisions. Eliot Spitzer, the former New York attorney general, and one of the individuals who contributed to the 2003 legislation, said: “It shouldn’t be called the JOBS Act, it should be called the Bring Fraud Back to Wall Street Act,” according to DealBook.
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