Danger Ahead: Many critical investor protections were stripped away by the JOBS Act.

[girl gone mad]

Guys, you need to be aware of this and please let your retirement-age friends and family members know what's going on. They are about to be targeted by sleazy boiler room type scam artists.

Risky and Getting Riskier

Just what grandpa needed. Soon retirees and other investors will be barraged with advertisements for private stock offerings — via mail, cold calling, television, radio, billboards, the Internet and so on.

Such advertising, which used to be banned under federal securities law, will make it easier for hedge funds, venture capitalists, start-ups and other nonpublic companies to find investors. It will also make it easier for hucksters and rip-off artists to lure people into unsuitable investments and outright frauds because private offerings are not subject to disclosure requirements and other investor protections that apply to publicly held companies.

Bipartisan majorities in Congress and President Obama are to thank for this development. Bowing to the financial industry, they joined forces last April to pass a law that requires the Securities and Exchange Commission to lift the ban on mass advertising of private offerings.

The S.E.C., for its part, made matters worse this week when it proposed a rule to implement the law that utterly fails to address the fact that ending the ban will make everyday investors more vulnerable to fraud. While the commission has no choice but to lift the ban, it does have leeway to write the rules to decrease the threat to investors. It has not used that flexibility.

read more: http://www.nytimes.com/2012/09/01/opinion/risky-and-getting-riskier-for-investors.html?_r=0

[Canuckistanian]

1. Here's another reason

Our Canadian government (and a conservative one at that) took the trouble to warn us Canadians that US investments just got a whole lot more unreliable because of this bill. And to exercise more caution and diligence. I think it was aimed at the Snowbirds in FL and AZ.

This can't be good from a foreign investment POV.

[ProSense]

2. Interesting:

<...>

For instance, while the new law allows for mass advertising of private offerings, it also says the buyers of such securities must be “accredited investors,” generally defined as those with at least $1 million in net worth (not counting a home) or at least $200,000 of yearly income. The law also says that private stock issuers must take “reasonable steps” to verify that investors qualify as “accredited.” But the S.E.C. did not impose or even suggest verification procedures to ensure that investors meet the criteria...The S.E.C. should have amended the definition of accredited investor to include other evidence of financial sophistication.

<...>

The rule to lift the advertising ban is still subject to public comment and amendment before it is made final. But it is hard to be optimistic. The agency’s Republican commissioners have argued that the proposal should go into effect immediately and are angry about any delay. That is hypocrisy. Dozens of rules to implement investor protections and other reforms in the Dodd-Frank law have been delayed for more than a year, as those same Republican commissioners have supported endless study and legal challenges. But when it comes to reducing investor protections, they can’t move fast enough.

That's a lot of money.

[99th_Monkey]

3. Exactly why is this happening when 3 of the 5 SEC commissioners are "Democrats"? nt