Supporters of the Jumpstart Act, including Steve Case, who served on Obama’s jobs committee, say that the removal of the disclosure obligations and auditing requirements will help stimulate ‘crowd-funding’.
What crowd-funding really does is take the “find a bigger idiot” principle and add internet-scale economics to it. You no longer needed to know just a few, big idiots – as long as you can find a larger number of smaller idiots, you could make it up with volume.
What could possibly go wrong?
“This is like formally eliminating steroid testing for the first five years of a baseball player’s career,” says Matt Tiabbi, the writer who gave us the memorable image of Goldman Sachs as a “giant vampire squid wrapped around the face of humanity”. Taibbi discusses JOBS Act here.
“Get ready for an avalanche of shareholder suits 10 years from now, since post-factum civil litigation will be the only real regulation of the startup market,” he reckons.
How quickly the lessons of the first dot.com bubble have been forgotten.