U.S. JOBS Act sans Jobs

Here is an interesting article in Tuesday’s Online WSJ (subscription required) talking about the first entrants into the new JOBS Act machine. Turns out that “more than a dozen” of the companies that are itching to take advantage of the Act’s reduced reporting and governance requirements have no employees — nor any operations, for that matter. In fact, the description provided by reporter Emily Chasan is similar to the classic penny-stock scheme: the shell company.

As we warned in a letter to Congress and in a blog post earlier this spring, the threats to small investors from the Act’s provisions in many cases outweighed any benefits it would provide to small companies. By describing themselves as emerging-growth companies, issuers become strong temptations for certain classes of investors earning next to nothing on their traditional fixed-income investment vehicles. Read more.