Many market participants were taken by surprise by the enactment of the Jumpstart Our Business Startups (JOBS) Act. The JOBS Act, HR 3606, was passed by the United States House of Representatives on March 8, 2012. On March 22, the Senate passed HR 3606 with an amendment to Title III (providing for the crowdfunding exemption with enhanced investor protections). On March 27, the House of Representatives accepted the Senate’s amendment, and on April 5, President Obama signed the JOBS Act into law. To many, this may sound like a quick path for legislation, especially when considered in the context of a Congress that seemed virtually deadlocked and unable to reach the consensus required to take action on pressing issues. When considered closely and in context, however, it becomes clear that the Act was the culmination of an at least year-long bipartisan effort in both the House and Senate to address concerns about capital formation and unduly burdensome Securities and Exchange Commission (SEC) regulations.

The JOBS Act affects both exempt and registered offerings, as well as the reporting requirements for certain public issuers. A centrepiece of the Act is an IPO on-ramp approach for a class of emerging growth companies (Title I), with confidential SEC staff review of draft IPO registration statements, scaled disclosure requirements, no restrictions on test-the-waters communications with qualified institutional buyers (QIBs) and institutional accredited investors before and after filing a registration statement, and fewer restrictions on research (including research by participating underwriters) around the time of an offering.