December 19, 2012
Some commentators have suggested that the SEC and its commissioners should support or oppose the JOBS Act, such as to merge and append other prior or pending legislation into the JOBS Act through pending SEC administrative action.
The SEC and its commissioners do not have the right to oppose nor to alter the JOBS Act in any way.
There should be, in my opinion, civil and criminal liability personally for everyone at the SEC who has participated in the recent bureaucratic maneuvering and "rulemaking" procedures in violation of the JOBS Act.
It may already be illegal for politicians or bureaucrats, be they elected, appointed or just hired professionally, to willfully violate the law based on the idea that they have the right to interfere with or confuse and delay activities in society that have been expressly legalized by statute.
Finding a complainant who will press charges, and a prosecutor and a judge who will enforce criminal statutes against the SEC and its commissioners and employees may sound difficult, but because the SEC is not a body of the Federal government we do not require its consent nor its cooperation in order to initiate civil or criminal legal action against it and its members.
The SEC was created, by the 1934 Exchange Act, as an independent Commission to provide oversight and regulatory enforcement assistance to the people of the United States. It does so by issuing opinions, publishing forensic reports or enabling companies and individuals to file forensic reports in a public document repository, and by filing civil lawsuits. The SEC is not an agency of law enforcement, and it is not a part of the Federal government. Surely its commissioners and its employees are aware of this fact, and thus understand the reality of their personal legal positions and their potential exposure.
How many startups have already failed, and how many will not be formed that would have been, as a result of the refusal of the SEC to comply with the JOBS Act by the statutory deadline of July 4, 2012?
The market may have a survivors' bias, but the Executive and Legislative branches of our government have already decided to let the market decide who the survivors will be. By passing the JOBS Act they have changed the law already. The SEC is now willfully in violation of Federal law, and as such in my view it is losing its authority to help shape the future interpretation and administration of economic justice.
It is time for a competitor to the SEC to emerge in the marketplace that will do a better job of providing opinions, publishing forensic records of transparent business activity, and filing civil lawsuits against anyone who violates the spirit or the letter of civil rules, regulations. Such competitor could also help local and national law enforcement agencies identify potential violations of criminal statutes and participate as forensic investigator in connection with prosecutions, and do a far better job of investigation and forensic reporting than anything the SEC has ever achieved.
I believe that a private, for-profit company can do a better job of helping the Executive and Judicial branches of government with civil and criminal forensics than the SEC has done since 1934.
The JOBS Act modifies primarily the 1933 Securities Act, since it primarily relates to companies that are not subject to the reporting provisions and registration requirements of the 1934 Exchange Act. It is ironic that a non-governmental body that was created by the 1934 Exchange Act would be interfering for political reasons (and out of self-interest) in the application of revised statutes that pre-date the creation of the SEC, statutes from 1933 that would exist and be relevant to everyone even if the 1934 Exchange Act were to be repealed in its entirety.
In my opinion, the SEC's errant response to, and mishandling of, the JOBS Act is already creating an existential crisis for the SEC. As if the events and collapsing frauds of 2007-2012 have not already created such an existential crisis for the incompetent agencies and commissions of all types, everywhere, that were supposedly "regulating" or "overseeing" those events during the time period in question.
Co-Founder and CEO
Public Startup Company, Inc.