December 7, 2012
The SEC needs to implement its proposal to remove the ban on general solicitation immediately. It is impossible for the SEC to please everyone, regardless of the final rules that are implemented. However, this is no excuse for inaction, especially when the removal of the ban on general solicitation was mandated by Congress, and is indeed law. The American people elected the members of Congress and the President, who establish the laws. The SEC should not be allowed to block the will of the people, by holding up the implementation of laws imposed by Congress. The SEC staff was correct in concluding that there was no need for a public comment period because they already know what those comments would be. Having read those comments personally, I agree that there are few new arguments either for or against the proposal. Opponents of the JOBS Act, who have submitted numerous comments that all sound the same, voiced those exact same concerns to Congress. Congress considered those comments and passed the law anyway. So the opponents lost their arguments in Congress, but have somehow been allowed to block the implementation of the law by making the same arguments to the SEC This is absurd and represents the worst of our government regulators. If the reports are true that Chairman Schapiro personally held up implementing the laws out of concern for her legacy, then that is even worse. This should be viewed as a violation of the law, and is no different than any other bad actors that intentionally violate the law. They should be punished if found guilty of violating the law.
That aside, now that the public comment period has long passed the SEC has had more than enough time to consider those comments, especially since they are the same comments as before the law was passed. I cant possibly imagine what other information the SEC needs to finalize their rules, especially given the simple and narrow mandate from Congress. Most of the opponents of the proposal wrongly assume that all private investment offerings are risky, and some have suggested they should come with a warning label. I have seen many private investment offerings that I believe have much lower risk than U.S. Treasury bonds at todays low yields. Inflation, for example, can make current Treasury bonds substantially more risky than say, a well-located income-producing property that is offered as a private investment offering. In fact, Warren Buffett has said that U.S. government bonds should come with a warning label for this very reason The SEC should not be in the business of choosing which investments they think are more risky than others. If they want warning labels, they should require them on all investments, not just private investment offerings. The SEC should focus on making sure the laws are followed and punishing those who choose not to follow the laws. I believe the SEC plays an important role in identifying wrongdoing and punishing wrongdoers. However, they should no longer be allowed to limit the freedoms of the American people. Investors should have a choice to invest in anything they want, regardless of their net worth or income levels. Issuers should be allowed to reach as many potential investors as possible in an efficient and cost-effective manner. Many small businesses, and the American economy, are suffering, which is the reason the JOBS Act was passed, to jumpstart our businesses. However, the SEC continues to drag their feet, knowing that their paycheck on Friday is safe, regardless of how well they do their jobs. The SEC should have no more excuses. Its time to implement their proposal and jumpstart our businesses.