It depends on who you ask.
For example, you could read a recent opinion article on CNN.com by Amy M. Wilkinson, a senior fellow at the Harvard Kennedy School of Government and a public policy scholar at the Woodrow Wilson International Center for Scholars. Wilkinson praises the JOBS Act’s passage, noting that it will promote entrepreneurship and job creation.
“Sarbanes-Oxley compliance is much more onerous for smaller companies than it is for larger entities such as General Electric, Johnson & Johnson or IBM,” Wilkinson writes. “The JOBS Act helps smaller companies conserve resources.”
On the other side of the coin, you could read Matt Taibbi’s Rolling Stone blog post with the not-too-subtle headline “Why Obama’s JOBS Act Couldn’t Suck Worse.” And Taibbi’s criticism does get worse from there.
“In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence,” Taibbi writes. “No, this law actually appears to have been specifically written to encourage fraud in the stock markets.”
These are just two examples of the wide range of opinions on the matter. You also have the Washington Post’s article titled “JOBS Act could give some banks a boost.” The Post article points out that small banks will be allowed to raise additional capital without having to register with the SEC, a requirement that can cost “tens of thousands of dollars a year in compliance costs” each year. Then there are opinions like that of former New York Governor Eliot Spitzer, who suggested renaming the JOBS Act the “Return Fraud to Wall Street in One Easy Step Act.”
So what do you think of the JOBS Act passage? Is it a business boost that the United States has been clamoring for since the economic collapse? Or is it an invitation to create more fraud like the kind that got us in this mess in the first place? Or is it somewhere in between? Let SearchCompliance.com know in our comments section below, or hit us up on Twitter @ITCompliance to provide your opinion. We’d love to hear our readers’ thoughts on such a divisive issue.]]>
The FTC’s recommendations are part of a privacy report that expands on one originally issued in December 2010. It recommends companies improve consumer privacy by implementing privacy protections at every stage of product development and increasing transparency around the collection and use of consumer information. The FTC also recommends Congress consider privacy legislation, data security notification legislation and mandating a “Do Not Track” option for consumers to opt out of online tracking.
In another big piece of regulatory compliance news, the House approved the JOBS Act and sent it to President Obama for his signature. Under the JOBS Act, emerging companies — defined as those with at most $1 billion a year in revenue — would be exempt for five years from external auditors’ review of internal controls as stipulated under Sarbanes-Oxley requirements. It also lessens other compliance regulations that JOBS Act critics say provide checks on corporate misconduct.
An interesting aspect is that both of these issues take into account the burden of small businesses. In the FTC’s preliminary report, it recommended the proposed online privacy rules apply to all commercial entities that collect or use consumer data that can be linked to a specific consumer, computer or other device. But after “recognizing the potential burden on small businesses,” the FTC’s report concludes that the final framework “should not apply to companies that collect and do not transfer only nonsensitive data from fewer than 5,000 consumers a year.” As for the JOBS Act, proponents say loosening compliance regulations for small and emerging companies would boost the economy.
It’s admirable (and necessary) that the federal government is taking small businesses and their limited resources into account when developing these rules. But there are a few questions: Don’t these small and emerging companies have potential infractions? If they don’t have the resources to comply with online privacy rules and compliance regulations, doesn’t this lack of resources make them even more vulnerable? Instead of excluding these smaller and emerging businesses from the rules altogether, perhaps catering regulations to take their plight into account is a better answer. If not, we could be back in the same boat again in a few years, after these types of businesses are found to be in violation of rules designed specifically to protect consumers.]]>