WASHINGTON —Despite warnings that less government oversight might mean more investment scams, Congress on Tuesday sent President Barack Obama legislation he endorsed making it easier for startups to raise capital without running afoul of federal regulations.
The legislation, backed by Silicon Valley and the high-tech industry, is on course to be one of the few achievements this year for a Congress mired in partisan divisions and primed for the fall elections.
The 380-41 vote in the House overshadowed misgivings among some Democrats and Democratic allies — including unions and consumer groups — that the bill backpedals on investment protections put in place after the dot-com excesses and Wall Street meltdown and could lead to fraud and abuse.
The Senate passed the bill last week on a 73-26 vote after attaching an amendment that tightened rules for seeking out investors on the Internet. All “no” votes in the House and Senate came from Democrats.
The legislation combines a half-dozen smaller, bipartisan bills that exempt young companies from Securities and Exchange Commission reporting rules in order to reduce the costs and red tape of raising capital.
The centerpiece provision would phase in SEC regulations over a five-year period to allow smaller companies to go public sooner. Firms that have annual gross revenues of less than $1 billion would enjoy this “emerging growth company” status.
Another provision facilitates the practice of “crowdfunding” in which the Internet is used to solicit a large number of smaller investors.
“The jobs act is a victory for unemployed Americans who are literally crying out for jobs. It is a victory for small companies and for entrepreneurs who want Washington to reduce the red tape that stifles innovation, economic growth and job creation,” said House Financial Services chairman Spencer Bachus, R-Ala.
Democrats referred to the measure as an initial-public-offering bill and said its effect on job markets would be modest at best.
