Saturday, June 09, 2012

SEC Comm. Paredes Says JOBS Act Is Step in Right Direction

Recently, SEC Commissioner Troy Paredes emphasized that facilitating capital formation is one of the SEC’s fundamental goals and that a steadfast purpose of the federal securities laws is to encourage investment so that businesses can raise the capital they need to drive economic growth. In that context, he welcomed the JOBS Act as a significant step in the right direction for three main reasons. First, for a new company to emerge and a smaller firm to take off, more is needed than an entrepreneur’s ingenuity, hard work, and determination. Small business also needs capital, said the Commissioner, who is optimistic that the JOBS Act will help those businesses that need capital find those investors who want to provide it.

Second, as they continue to grow, smaller enterprises not only hire more people, but they drive new innovations and technologies that lead to incrased productively. When new and emerging companies get the resources they need to invest and expand, he reasoned, the standard of living improves. Experience has taugh that some of these ventures will go on to become industry leaders and household names.

Third, the JOBS Act stands to benefit investors too, not just issuers. In discussions that center on the federal securities laws, it seems as if the goal of capital formation is often pitted against the goal of investor protection, he noted, as if to take a regulatory step to ensure that the regulatory regime is properly tailored and flexible enough to promote capital formation necessarily comes at the expense of investor protection. The  Commissioner sees it differently. To him, capital formation itself advances core investor goals