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The JOBS Act Loosens Regs for Companies Like These

President Barack Obama gestures while talking on the phone in the Oval Office.
President Barack Obama gestures while talking on the phone in the Oval Office.Photograph by Pete Souza/White House

The Jumpstart Our Business Startups Act being signed by President Obama today will mean lighter-touch regulation for relatively small companies that want to go public. The idea is that they shouldn’t be held to the same bar initially as established public companies like IBM or Berkshire Hathaway, because their costs of complying are, proportionally, a much bigger burden. Among other provisions, the JOBS Act gives so-called emerging growth companies up to five years to fully comply with all the accounting rules required of public companies today. Critics, including the chairman of the Securities and Exchange Commission, warn such exemptions could eviscerate shareholder protections.

The law isn’t retroactive, at least not more than a few months: Companies that went public before Dec. 8, 2011, don’t qualify for the exemption. But if we apply the JOBS Act’s “emerging growth company” criteria to stocks now trading on U.S. exchanges, we can get a sense of the types of companies that would enjoy looser regulation under the law.