“Overall, new businesses account for almost every new job created in America. For start-ups and small businesses, this bill is a game changer. Because of this bill, start-ups and small businesses will have access to a bigger pool of investors.”
— President Barack Obama, March 27, on the JOBS Act.
Believe me, titles of popular legislation are invariably misleading. Take for example “The Corporate and Auditing Accountability and Responsibility Act of 2001.” Known as Sarbanes-Oxley, the law has proven to be onerous for publicly traded companies, leading many companies to go private and initial public offerings (IPOs) to dry up in the United States.
Congress recently passed, and the President signed on March 27, the “Jumpstart Our Business Start-ups” Act, or the JOBS Act. I don’t know if it will create any jobs, but it could be a goldmine for investors who previously have been locked out of the secretive world of “private placements,” also known as “founders stocks” that are offered to company insiders and wealthy “accredited” millionaires.
I’ve invested in dozens of “private placements” over the years. These investments occur in the early stages of a start-up company that may be years away from going public. Like tax shelters, they are speculative, but in a few cases, I’ve made out spectacularly well by making 20 or 30 times my money (what acclaimed money manager Peter Lynch calls a “ten bagger”).
The JOBS Act allows small investors to get a piece of the action previously restricted to wealthy investors. Under the new rules, private companies even can advertise online to potential investors. Private firms can avoid onerous regulations and registration requirements of the Securities & Exchange Commission until the number of shareholders reaches 2,000 (the previous limit was 500). Individual investors can invest up to $10,000 without proving they are “accredited,” high net worth investors.
Where to look for private placements?
One way is to invest directly. We’re holding a special four-hour session at FreedomFest, July 11-14 at Bally’s in Las Vegas on “Special Situations in Private Placements,” where specialists Rick Rule, Lou Petrossi, Ralph Williams, and Ron Holland, among others, will spell out the spectacular opportunities and risks associated with private equity investments, and some specific deals now available. (I’m personally invested in one of the deals.)
What’s FreedomFest all about? Everything! Watch this three-minute video. The Oxford Club (Alex Green, Karim Rahemtulla, Marc Lichtenfeld, Steve McDonald) is hosting a one-day conference at FreedomFest. I’ll be there, doing several workshops, along with Sen. Rand Paul, Steve Moore, Judge Andrew Napolitano, Steve Forbes, John Mackey, Rick Rule and Keith Fitz-Gerald. (as Keith says, “FreedomFest is the conference even speakers like to attend.”) To see what all the excitement is about, go to www.freedomfest.com, or give Tami Holland a call toll-free 1-866/266-5101
Vegas is a good place to attend an intensive workshop on private placement because investing $10,000 in a private equity deal is like rolling with loaded dice!
You Blew It: How to Create More Unemployment
“The Employ American Workers Act has achieved three things: Lost ideas. Lost jobs. Lost taxes.”
— Matthew J. Slaughter, Wall Street Journal (June 21, 2012)
Somebody should write a book called “The Law of Unintended Consequences.” Typically, when Congress passes a law favoring one goal, it has the opposite impact. Take the high-minded “The Employ American Workers Act” that was buried in the American Recovery and Reinvestment Act of 2009 (another high-minded act that really means “let’s go into more debt”). Somebody should also write a book called “Buried in the Act.” There’s always something buried in a bill that has been snuck in without any discussion or debate. In this case, it’s a disaster.
The American workers provision requires financial companies to limit their talent pool to Americans.
I have a simple moral question: what crime has a talented and educated man or woman committed by being born in a foreign country? It should be a fundamental right for individuals, no matter where they are born, to come to a voluntary agreement with a company for employment purposes?
Protectionism is a great moral evil, especially when it comes to employing foreigners.
Needless to say, this little known provision has resulted in the best and the brightest foreigners leaving the United States and never coming back. Yet, studies have shown that foreign entrepreneurs start a great many new companies that hire workers here in America. Naturally, that workforce includes Americans. It’s a win-win situation.
But with the artificial restrictions of the “Employ American Workers Act,” it’s a lose-lose situation.
P.S. I just found out that my book, “Economics on Trial” is up for Freedom Book of the Month for July. To vote, go to
• Today’s challenging market conditions require even more knowledge than ever for investors and traders like you to keep pace with the latest market intelligence to safeguard your portfolio and to profit from opportunities that only may be available for short periods of time. Join me at this year’s MoneyShow San Francisco, August 24-26, at the San Francisco Marriott Marquis to hear recommendations and advice about how best to profit in 2012 and beyond! Register FREE today by clicking here, by going to MarkSkousen.sanfranciscomoneyshow.com or by calling 1-800/970-4355 and mentioning priority code 027882.