The much ballyhooed JOBS (Jumpstart Our Business Startups) Act passed one year ago late next
By law, the SEC is required to publish final rules by the anniversary date. I haven't heard much
about the act or the rules since passage, but as there is no penalty prescribed for missing the
deadline, it may be that the SEC will follow the same rule that the government follows regarding the
annual requirement to pass a budget.
Irregardless (yeah, I'm told that is not a word, but I just used it, so if it wasn't then it is now) I was
curious as to how many businesses are anxiously awaiting the JUMPSTART date so they can raise
the millions they need to start, expand or buy a business enterprise.
I would be particularly interested in learning how many BLACK businesses are planning to take
advantage of this law, which loosens the rules for issuing and promoting the sale of their company
stock and allegedly will be a boon to small businesses in search of operating capital.
As "D Day" approaches I would like to register my customary pessimistic perspective on govern-
ment attempts to legislate issues about which few of them know diddly doo doo. It is my opinion
(and no exaggeration, no joke) that the phrase the American people should fear most is “We are
from the government and we are here to HELP you”.
The act first of all, speaks of a SMALL BUSINESS as one with revenues of less than $10B.
I can think of only a handful of Black firms with that kind of revenue, and they are likely to be
closely or privately held and don't need this kind of “help” any more than does Ford Motor
The act also says we don't have to follow the same very expensive regulatory submissions and
paperwork as the conglomerates do, but still we would have to submit audited financial statements
just like they do. A cursory review of the requirements of this audit should result in the words I WANT
MY LAWYER AND ACCOUNTANT!!! not to mention your banker who will have to loan you money
to pay the legal fees.
Continued from PG1
The census bureau reports that as of 2007 there are approximately 1,980,000 Black owned businesses
in the country, averaging $79,000 in revenue. I said REVENUE (that's total sales, not take home money)
and a payroll that features just one person. That says to me that the average Black business would not
see a single dime of benefit from this act because not even the most lax requirements of government will
inspire serious investors, even the least informed ones, to assume the risk of putting their money in
companies with no better track record than this.
Couple this with the fact that a majority of Black firms are not even incorporated, which adds yet another
hurdle and expense that participation would require.
There are exceptions, of course. I can't think of any right now but the law of averages requires that I
mention it. Of course it is my opinion from reading the act many times and even research prior to passage
of the act that any company, large or small, can raise money by issuing stock via the PRIVATE PLACE-
MENT process, which means the stock can be sold by stockholders to private citizens and the company
can issue stock to private individuals who request it privately.
I predict a huge new industry will spring up of entrepreneurs who will establish new businesses that help
others navigate and negotiate the provisions (and the pitfalls) of this legislation. Now THOSE companies
will be able to use the act to their advantage because they will be well financed and the investing community
will know what great potential these companies will enjoy. I'm predicting that the first rush of applicants will be
service companies set up to serve the rest of us who might be contemplating the act.
I am not a lawyer but I watch Matlock on TV a lot, and I did learn how to do legal research, which mainly
entails reading and deciphering the fine print and shining light on the innuendos, but before you undertake any
action regarding the issuance of your company's stock you should consult that high priced lawyer and accoun-
tant team, who will likely say “Call me when 1. The SEC publishes the final rules, 2. your company is ready to
incorporate or you have prepared your business plan and 3. after your check has cleared”.
About the author:
Steven Lemon is a serial entrepreneur, managing director of the New Black Wall
Street Exchange,a business services portal and publisher of the Black Business
Pages, an online directory of Minority businesses.
Send questions or comments to him at firstname.lastname@example.org Mention