• The JOBS Act: New Rules for Emerging Growth Companies, Private Placements and "Crowdfunding"
  • April 5, 2012 | Authors: Bruce C. Bennett; Warren G. Caywood; Keir D. Gumbs; Frederick J. Knecht; David B.H. Martin
  • Law Firms: Covington & Burling LLP - New York Office ; Covington & Burling LLP - Washington Office ; Covington & Burling LLP - New York Office ; Covington & Burling LLP - Washington Office
  • On March 27, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was sent to President Obama for signing, which is expected soon. According to the preamble for the legislation, the JOBS Act is intended to increase American job creation and stimulate economic growth by improving access to the public capital markets for a new category of issuer created by the JOBS Act -- the “emerging growth company.” The JOBS Act also includes provisions that reduce restrictions for all companies (whether or not emerging growth companies) on exempt offerings under Regulation D and Rule 144A under the Securities Act of 1933 (the “Securities Act”) and may facilitate the ability of companies to access capital without registration with the Securities and Exchange Commission (the “SEC”). Whether the legislation will achieve its purpose is an open question -- the JOBS Act met with criticism and skepticism by the SEC and many institutions, some believing the Act will not do much more than add costs, raise confusion and open the door to fraudulent behavior. In this advisory we discuss the key elements of the JOBS Act as well as their implications for companies, investors and financial intermediaries.