The article discussed the recently enacted JOBS Act, specifically concerns surrounding the relaxed rules for some public offerings.
Stephen Graham, co-chair of the life sciences group with Fenwick & West and co-chair of the SEC's Advisory Committee on Small and Emerging Companies, says that this bill does put investors in harm's way.
Graham also said, "Being able to advertise over the Internet and on billboards – basically removing those restrictions – and permitting any investor, no matter how unsophisticated to participate would raise investor protection questions. Even if you set up firewalls by limiting the size of the offering or limiting the size of the investment, $10,000 or event $1,000 can be a great deal of money to many people."
Graham went on to say that investors should be protected more then entrepreneurs who are unable to raise money from friends, family, angel investors or venture capitalists. He also noted that his concern for that class of entrepreneurs, "is countered by the concern that there will be people who are far less than forthright that will go out and solicit money and basically commit fraud."
Graham also pointed out his concern over the definition of an emerging growth company as one with less than $1 billion in annual revenue. He said, "If you go back and look at the old environment in the 90s – when something like a small IPO was feasible – I'm pretty sure we weren’t talking about companies with a billion dollars in revenue."
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