Thursday, April 5, 2012

Obama's PEU JOBS Act

Dealbook reported:

The JOBS Act appears to loosen financial communication more broadly. For instance, the bill will relax rules on how investment firms can market themselves to the public, reversing regulations that restrict what hedge funds and private equity firms can say publicly about their investment strategy.
President Obama offered upon signing the bill:

The bill “represents exactly the kind of bipartisan action we should be taking in Washington to help our economy.”

As I've said many times on this blog, Red and Blue love PEU (private equity underwriters).

The bill also exempts emerging growth companies from certain disclosure and governance requirements for up to five years. It will also provide a new form of financing to start up companies.

Will this pave the way for the next generation of PEU's?

“Because of this bill, start-ups and small business will now have access to a big, new pool of potential investors — namely, the American people. For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in,” the president said in a Rose Garden signing ceremony.

Anybody can hawk anything, at least the bill brings that prospect closer to life.  How many will promise 30% annual returns?

The 2008 financial crisis killed investing, maybe for a generation.  This may entice those with short memories.  Investors are expected to trust Wall Street/PEU firms that pushed junk or practiced puffery (their words, not mine).  I guarantee they'll be making fees off the American people.

PEU's are so ubiquitous now, under the JOBS act, every American can be one.  A problem arises in such a scenario.  It's not financial literacy.  With every citizen a PEU, who will be the shill?