Moving Ahead for Progress in the 21st Century Act--Continued

Floor Speech

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Mr. WHITEHOUSE. I wish to express deep concerns about the so-called JOBS Act sent to us by the House and to commend my senior Senator Jack Reed and Senators Levin and Landrieu for putting forth a balanced and thoughtful alternative.

Everyone in this body agrees that Washington should be doing as much as it can to create jobs for middle-class Americans. But if the financial crisis of 2008 taught us anything, it is that smart regulation of our capital markets is a key element of sustained economic growth.

Unfortunately, this legislation would eliminate key investor protections and allow for fraud and abuse to flourish in a shadowy world of unregistered securities. According to John Coates and Bob Pozen of the Harvard Law and Business Schools, respectively, the House bill ``could spur more shady deals than new jobs.'' John Coffee of Columbia Law School has called it the ``the boiler room legalization act''--a reference to brokerage operations that profit from unloading questionable securities on unsuspecting and inexperienced investors.

Over the past few days, opposition to the House bill has extended far beyond economists, with investor and consumer protection groups, ranging from the Council of Institutional Investors and the North American Securities Administrators Association to the AARP and Consumer Federation of America, calling for substantial changes. These groups have encouraged the Senate to reexamine many of the House bill's provisions, including ones that would: allow unregulated Web sites to sell unregistered stock to middle-class investors; permit stock brokers to advertise risky private offerings on billboards and in cold calls to seniors homes; and strip away the corporate governance and executive compensation transparency requirements that we worked so hard to pass in the 2010 Wall Street reform bill.

Senators Jack Reed, Carl Levin, and Mary Landrieu have worked around the clock to produce an alternative that maintains key investor protections. I commend them for their work, and am proud to cosponsor their substitute amendment. I hope we can use this amendment as a starting point to negotiate a compromise final bill--one which achieves the goal of making capital more accessible to small start-ups, without making the markets riskier for average investors. If we do not take the time to get this important bill right, I fear we will live to regret our haste.

SEC Chairman Mary Schapiro framed well the dangers of undercutting securities regulations when she warned, ``if the balance is tipped to the point where investors are not confident there are appropriate protections, investors will lose confidence in our markets, and capital formation will ultimately be made more difficult and expensive.'' Let's pass a capital formation bill that strikes the right balance between capital formation and investor protections. In my time as U.S. Attorney and Attorney General, I have seen the devastation that financial fraud can inflict on a family, and I have seen how unscrupulous con men, stock jobbers, fraudsters, and boiler room operators can be. It is worth it to take the trouble to protect against the crooks who could take advantage of the loopholes this bill leaves to exploit innocent victims. I urge my colleagues to support the Reed-Levin-Landrieu alternative and to oppose the House-passed bill. I thank the Chair, and I yield the floor.

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