Background on the INVEST In America Act

Thursday, March 15, 2012

Read Sen. Levin's Senate floor speech on the INVEST in America Act.

Read the INVEST in America Act. [PDF]

Legislation passed by the House that supporters say is designed to create jobs would strip away important protections and put the stability of the economy and our financial markets at risk. The INVEST in America Act, introduced by Sens. Reed, Landrieu and Levin would repair the House bills flaws. Below is background information on the INVEST in America Act and information on the building wave of concern over the provisions of the House-passed legislation.

Seven Essential Fixes to the House Bill

  • The House bill would allow companies to advertise risky, less-regulated, unregistered private offerings to the general public using billboards along the highway, cold calls to senior living centers or other mass marketing methods.  The Reed-Landrieu-Levin amendment would allow firms to advertise and sell such offerings only to investors with appropriate resources and sophistication to bear the risks. 
  • The House bill would tear down protections put in place after the late 1990s internet stock bubble burst that prevented conflicts of interest from tainting the quality of research about companies.  The Reed-Landrieu-Levin amendment would continue the protections that make sure that research used to advise investors is not tainted by conflicts of interest.  The SEC, pension funds, and even the U.S. Chamber are concerned the House bill’s research provisions go too far.
  • The House bill would allow very large companies, with up to $1 billion in revenues per year, to offer stock to the public and yet avoid financial transparency and auditing requirements designed to ensure they’re not cooking the books.  Many of these protections were established to prevent the next Enron or Worldcom, and yet they would be cleared away for even large companies.  The Reed-Landrieu-Levin amendment would ensure that essential investor protections apply to large companies by lowering the exemptions to companies with less than $350 million in revenues.
  • The House bill would allow unregulated websites to peddle stocks to ordinary investors without any meaningful oversight or liability, which could give rise to fraud, money laundering, and other risks.  This violates our obligation to prevent money laundering, and has been described as the “Boiler Room Legalization Act.”  The Reed-Landrieu-Levin amendment would protect the integrity of these markets by ensuring that these website intermediaries are subject to appropriate levels of oversight.
  • The House bill would allow extremely large companies, with tens of thousands of shareholders, to evade SEC oversight.  It would allow banks – with even hundreds of billions of dollars in assets – to deregister and stop being subject to SEC oversight and critical investor protections that ensure corporate transparency, integrity, and accountability. The Reed-Landrieu-Levin amendment would provide relief to companies that compensate employees with stock, but at the same time ensure that banks and other large companies, with lots of shareholders, are subject to basic transparency, integrity, and accountability protections.
  • The House bill does not include authorization of the Ex-Im Bank.  Time is of the essence to reauthorize Ex-Im.  The Bank’s temporary extension expires on May 31st, and will hit its cap of $100 billion in lending before the end of April.  Renewing Ex-Im Bank’s charter with increased lending authority is the only practical way of countering the predatory financing practices of other trading nations, many of whom devote a much larger share of their national wealth to assisting exporters than America does.  It supports almost 300,000 jobs yearly.
  • The House bill does not include the President’s request to expand the capacity of the SBA’s venture capital program, the Small Business Investment Company program (SBIC).  This bill would allow another $1 billion in SBA guaranteed debt for smaller, fast-growing firms, and it also extends for one-year the SBA’s 504 refinance loan program to help firms refinance commercial real estate into long-term, fixed-rate loans.  These modifications have created and saved hundreds of thousands of American jobs at no cost to the tax payer.

Serious Concerns Raised

Current and Former Financial Regulators

  • Securities and Exchange Commission
  • North American Securities Administrators Association (state regulators)
  • Arthur Levitt (former Chairman of the SEC, head of AMEX, and small business owner)
  • Lynn Turner (former Chief Economist of the SEC)
  • Others


  • Council of Institutional Investors (largest pension plans in the US)
  • Renaissance Capital, Kathleen Shelton Smith
  • Others

Consumer and Investor Protection Groups

  • AARP
  • Americans for Financial Reform
  • Consumer Action
  • Consumer Federation of America
  • Public Citizen
  • SAFER: The Economists' Committee for Stable, Accountable, Fair, and Efficient Financial Reform
  • Others

Securities Experts and Practitioners

  • Professor John Coffee
  • Professor John Coates
  • Professor Jay Ritter
  • Mark Hiraide
  • Others

Recent Press

New York Times:

  •  “They Have Very Short Memories” (OP-ED), March 10, 2012.
  • “The Senate Overachieves,” (OP-ED) Gail Collins, March 14, 2012.
  • “A Jobs Bill that Will provide help, but for all the wrong people,” Jessie Eisinger, March 14, 2012.

Wall Street Journal:

  •  “Jobs Bill Loosens IPO Regulations”, Andrew Ackerman and Lynn Cowan, March 8, 2012.
  •  “IPO Skids to Get Greased”, Andre Ackerman, March 6, 2012.
  • “SEC Cracks Down on Pre-IPO Trading,” Randall Smith and Jean Gaglesham, March 14, 2012.


Washington Post:

  • “SEC probes trading in pre-IPO tech shares”, David Hilzenrath, March 14, 2012.
  • “JOBS Act could remove investor protections, SEC Chair Mary Shapiro Says,” David Hilzenrath, March 14, 2012.
  • “Bill to help small businesses raise capital goes too far” (OP-ED) John Coates and Robert Pozen, March 14, 2012.

The Globe and Mail:

  • “The Senseless War on Investor Protection,” David Milstead, March 14, 2012.


  • “Job Creation Bill Seen as Eviscerating U.S. Shareholder Protections,” Jesse Hamilton and Phil Mattingly, March 13, 2012.

San Francisco Chronicle:

  • “Financial regulations gutted in new bill”, Kathleen Pender, March 11, 2012.
  • “SEC Chairwoman Urges better Investor Protection,” Kathleen Pender, March 15, 2012.

Compliance Week:

  • “Congress Moves to Turn Back SOX, Dodd-Frank Compliance”:  (OP-ED) March 12, 2012..

Baltimore Sun:

  • “Sarbanes, Edwards say jobs bill hurts transparency”: John Fritze, March 9, 2012.


  • Blog:  Huffington Post, “Extraordinary Popular Delusions and the Madness of Crowd (Funding)”, Barbara Roper, March 6, 2012.
  • Blog:, “The JOBS Act and the IPO Off Ramp: Discouraging IPOs” J. Robert Brown, March 12, 2012.
  • Blog: Motley Fool (Commentary), “Imaginary Problems: Who Really Benefits from Lower Regulatory Burdens”:  Bill Mann, February 2, 2012. 

Select Quotes

Current and Former Regulators

  • One provision “could take us back to the conflicted practices of the dot-com bubble.”  John Nester, Spokesman , SEC, Mar. 12, 2012.
  • The IPO on-ramp “is so broad that it would eliminate important protections for investors in even very large companies.”  Mary L. Schapiro, Chairman, SEC, Mar. 13, 2012.
  • “Small businesses are important to job growth, and to improving the economy. However, by weakening investor protections and placing unnecessary restrictions on the ability of state securities regulators to protect retail investors from the risks associated with smaller, speculative investments, Congress is on the verge of enacting policies that, although intended to strengthen the economy, will in fact only make it more difficult for small businesses to access investment capital.” Jack E. Herstein, President, North American Securities Administrators Association, Inc., Mar. 12, 2012.
  • “It won’t create jobs, but it will simplify fraud.”  Lynn Turner, former Chief Accountant, SEC, Mar. 13, 2012.


  • "The proposed definition of 'emerging growth company,' particularly the $1 billion in annual revenue threshold, is so broad that it would eliminate critically important protections for institutional investors and the millions of American retirees and workers that are the beneficiaries of their funds.  With this enormous loophole, this legislation will likely create more risks to investors than jobs."  Jeff Mahoney, Council of Institutional Investors, Mar. 14, 2012.

Consumer and Investor Protection Groups

  •  “[T]hese bills, advanced based on their potential to create jobs, inadequately protect against the potential harmful impact on investor protections and market integrity … [T]he capital formation proposals now under consideration very well may … open the floodgates to a repeat of the kind of penny stock and other ‘boiler room’ frauds that have ensnared financially unsophisticated and vulnerable investors in the past.”  Joyce A. Rogers, Senior Vice President of Government Affairs, AARP, Mar. 7, 2012.
  • “Workers’ retirement savings will be in greater risk of fraud and speculation if securities market deregulation once again is railroaded through Congress.  Once again our economy will be at risk from the folly of policymakers promoting financial bubbles and ignoring the needs of the real economy.” AFL-CIO Executive Council, Mar. 14, 2012.
  • “Because it misdiagnoses the problem and proposes a sweeping reduction in investor protections, the JOBS Act risks exposing investors to a new round of damaging fraud and abuse while undermining market transparency. Less reliable and transparent capital markets risk driving up the cost of capital for precisely those companies this legislation purports to benefit.”  Consumer Federation of America and Americans for Financial Reform, Mar. 5, 2012.