Senate Republicans want JOBS Act replay
When it comes to financial regulation, or deregulation, branding can be everything. Or at least that's what some Senate Republicans are hoping.
Driving the news: GOP members of the Senate Banking Committee have introduced the "JOBS Act 4.0," a hodgepodge of old and new proposals aimed at encouraging capital formation for startups and encouraging IPOs.
- This comes 10 years after passage of the original JOBS Act which, as Kia Kokalitcheva wrote on Saturday, remains a gauzy-eyed bipartisan success story despite its quantitatively mixed results.
- "JOBS Act 4.0," however, may need some changes before it gets buy-in from across the aisle. Sen. Pat Toomey (R-Pa.) acknowledged as much, saying he plans 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."
- On the other hand, it's pretty savvy to introduce an IPO enablement bill when the IPO market is moribund.
What it does: The most significant change would be to expand the definition of "qualifying investments" by VC funds, to include secondary investments in startups and investments in other VC funds. Today, there are capital percentage limits on such deals unless the VC firm becomes a registered investment adviser, which increases compliance costs.
- Worth noting, however, that the definition wouldn't be expanded to include digital tokens.
Other "JOBS Act 4.0" provisions would double the number of limited partners allowed in a VC fund that raise $50 million or less, change public company reporting requirements to semi-annually from quarterly, let gig economy companies provide equity compensation to contractors and broaden the definition of accredited investors to those who pass an SEC-designed test.
Big picture: VC and PE fund managers keep privately grousing about efforts to increase regulation, including possible LP identity disclosure rules, but "JOBS Act 4.0" moves in the other direction. And, like its namesake, mostly plays at the margins without raising too many bright red flags.