Only 29 Percent of CFA Institute Members Want JOBS Act Passed

Less than a third of CFA Institute members in the United States are enthusiastic about the JOBS Act as passed by the House and now under consideration of the Senate, according to a recent survey by the global association of investment professionals. Just 29 percent of members think the Senate should pass the bill as is, and 63 percent believe that the proposed bill would create additional gaps in investor protection and transparency. In addition, 59 percent of members think the bill would decrease an investor’s ability to make informed investment decisions.

The proposed “Jumpstart Our Business Startups” Act would ease regulations and disclosure requirements for companies looking to go public. CFA Institute outlined several concerns about the bipartisan bill last week in a letter to Sen. Charles Schumer (D-N.Y.), including a proposal to permit brokerage firms analysts to write and distribute research on companies whose IPO shares their firms are underwriting. The letter also details additional safeguards needed to balance the capital needs of small companies and investor protection.

“Allowing analysts to evaluate IPOs underwritten by their own firms is a return to the kind of conflicted research that decimated investor confidence after the burst of the dot-com bubble,” said Kurt Schacht, CFA, managing director for market policy at CFA Institute. “And, the JOBS Act requires no visible warning for investors on SEC filings and financial updates to note the companies are not subject to normal financial reporting rules. As is, this legislation makes it more difficult for investors and investment professionals to adequately research investment in these securities.”

The CFA Institute JOBS Act member survey was conducted online from March 13-16, with 491 U.S. members. The complete results:

The opinion of CFA Institute members reflects the organization’s mission to lead the investment profession globally by setting the highest standards of ethics, education and professional excellence. “While there may be economic benefits to increasing opportunity for small companies to access the capital markets for equity and debt funding, we believe that goal must be balanced with the transparency needs of investors,” Schacht said.

The Senate should: Pass the bill as is 29% Pass a bill with more investor protections 27% Not pass this bill 33% Other 5% No opinion 6% What effect, if any, would the changes to securities law proposed by this bill have on investor protection? The proposed bill would create additional gaps in investor protection and transparency 63% The proposed bill would improve investor protection 3% The proposed bill would have no effect on investor protection 21% Other effect 7% No opinion 5% What effect, if any, would the bill have on an investor’s ability to make informed investment decisions?: The bill would decrease an investor’s ability to make informed investment decisions 59% The bill would increase an investor’s ability to make informed investment decisions 9% The bill would have no effect on an investor’s ability to make informed investment decisions 23% Other effect 6% No opinion 4%

The opinion of CFA Institute members reflects the organization’s mission to lead the investment profession globally by setting the highest standards of ethics, education and professional excellence. “While there may be economic benefits to increasing opportunity for small companies to access the capital markets for equity and debt funding, we believe that goal must be balanced with the transparency needs of investors,” Schacht said.