(CN) - Amidst fierce criticism from regulators, the Jumpstart Our Business Startups Act is now up for public comment as the Securities and Exchange Commission wrestles with how to implement the much-maligned JOBS Act.
     As the White House touted the April 5 signing of the act, pundits and politicians alike raised their voices in chorus against the act which many fear will have devastating repercussions for the economy.
     "Congress and the White House have sacrificed investor protection," said the North American Securities Administrators Association in a press release issued on the day President Obama signed the bill.
     The bill's defenders claim it will be easier for startup companies to raise capital by exempting them from independent accounting requirements for up to five years after they first begin selling shares on the stock market. Additionally, the act circumvents rules that prevent bank analysts from talking up a stock just to win business. It will also allow executives to give "pre-prospectus" presentations to investors using visual aids and other tools and they will not be held liable for misrepresentations.
     Jack E. Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance's Securities Bureau, believes there is much to fear about the JOBS Act.
     "It will make securities law enforcement much more difficult," said Herstein. "This is an investor protection disaster waiting to happen."
     Many fear the JOBS Act will allow the same type of reckless behavior which led to the dotcom bubble.
     While firms will still be obligated to submit prospectuses before their IPOs, they'll still be held liable for what's stated in them, but it will be up to the investor to make sure that the prospectus matches the "pre-presentation."
     The act is focused on "compliance obligations" for "emerging growth companies," a new category defined as a company with less than $1 billion in revenue. It requires the SEC to create an exemption for securities sales of up to $50 million in a 12-month period.
     The NASAA's sharpest criticism takes aim at portions of the bill that require the SEC to establish a registration exemption for crowdfunding, and issuers utilizing the exemption will be shielded from state regulators while only having to disclose minimal information to the SEC. The JOBS Act will preempt the state's regulation of crowdfunding and place the matter solely in the already resource-strapped SEC's lap, leaving the agency responsible for overseeing the new market and preventing fraud.
     To comment, visit http://www.sec.gov/spotlight/jobsactcomments.shtml.