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Could JOBS Act Open Door to Fraud?

Proponents of the Jump-Start Our Business Start-Ups, or JOBs Act, contend the legislation will create more jobs by increasing the number of initial public offerings. Critics, however, say the Act is a sure-fire path to more investment fraud.

Under the JOBS Act, regulations would be lessened for emerging growth companies. In loosening those regulations, the doors are opened wide for potential abuse by companies to pump up their financials in order to lure new investors.

The Act also allows something called crowd funding, which permits companies to raise up to $1 million via online solicitations. Another provision in the JOBS Act lessens regulatory oversight by the Securities and Exchange Commission (SEC) and removes certain restrictions designed to protect investors from financial abuse and fraud.

“That is tantamount to putting up a sign saying ‘Swindlers Welcome,’ says an April 5 story in the Huffington Post on the JOBS Act.

The bottom line: Everyone is in favor of creating more jobs and jumpstarting the economy. And while the JOBS Act may sound good on surface, when you peel back the layers, many troubling questions remain.

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