State of Innovation

Patents and Innovation Economics

JOBS Act: Why Regulatory Agencies Are Un-Constitutional

The JOBS Act was passed by Congress on March 27, 2012.  It was designed to ease the absurd regulatory burden imposed on companies by Sarbanes Oxley.  I said that the Act was a small step in the right direct – JOBS Act Small Step in Right Direction.  It now appears that even this small step is going to be stopped or delayed.  The Securities and Exchange Commission Chair Mary Schapiro is delaying implementing this law.  She has decided on her own that this law is not in the interest of investors.  For more information see In the midst of a fiscal crisis we can’t afford to scrap the JOBS Act.

Nowhere in the Constitution does it say that administrators of regulatory agencies have the right to not enforce the laws passed by the Congress and signed into law by the President.  Ms. Schapiro should be thrown in jail for life – she is thousand times more dangerous than any stock swindler the SEC is chasing.  The stock swindler does not have the power to subvert the Constitution, but we put up with this in arrogant bureaucrats every day.  Come to think of it nowhere in the Constitution does it authorize the SEC or any of the other regulatory agencies.  The only Constitutional way to create a SEC, EPA, FBI, etc., would be for the states to create and control these agencies

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December 29, 2012 Posted by | News, sarbanes oxley | , , , , | Leave a comment

JOBS Act a Small Step in Right Direction

The Senate passed the JOBS (Jumpstart Our Business Startups) Act, H.R. 3606 and President Obama is likely to sign it.  The goal of the legislation is to reduce some of the regulatory burdens in raising capital for startups.  The Act exempts small firms from Section 404 of the Sarbanes-Oxley Act for up to five years according to Wikipedia.  It also includes some of the crowdfunding ideas of HR 2930.  This legislation is a positive step in the right direction.  Unfortunately, it is a pebble in Sea of laws, regulations, and taxes strangling technology startups in the US.  My guess is that the reason this legislation is passing has little to do with what is good for the country, but what is good for Wall Street banks.

In my book The Decline and Fall of the American Entrepreneur I show that every academic study of the effectiveness of our Securities Laws shows that they have been either totally ineffective at protecting investors or worse counterproductive. The real answer to the lack of funding for start-ups would be to repeal all Securities Laws and Regulations except the common law requirements under contract and tort law.

March 22, 2012 Posted by | -Economics, Innovation, Regulation | , , , , | 3 Comments