NEW YORK, April 5 (UPI) -- Former New York Gov. Eliot Spitzer said the JOBS Act includes provisions that allow fraudsters to set up camp on Wall Street.
The JOBS Act, which President Barack Obama signed into law Thursday, was opposed by financial regulators, including Securities and Exchange Commission Chairwoman Mary Schapiro, who said, "We should not walk backwards here," referring to a provision that allows financial analysts to publicly discuss relatively small companies they are researching for banks handling the public debuts.
Spitzer, quoted by The New York Times Thursday, said: "It is a bad sequel to a bad movie. It shouldn't be called the JOBS Act. It should be called the Bring Fraud Back To Wall Street Act."
Spitzer, also the state's former attorney general, helped negotiate the 2003 settlement that barred analysts from going public with their research, which is deemed a conflict of interest, given the analysts are hired by banks that would benefit by having shares in an initial public offering sell for a high price.
The JOBS Act is meant to make it easier for companies with less than $1 billion in annual revenue to seek capital by going public.
The longer name for the law, which is the Jumpstart Our Business Startups Act, reveals its intention.
In lobbying against the bill in March, Schapiro said, "Collusive behavior between analysts and bankers cost investors huge sums, shattered confidence in the integrity of research, and damaged the markets themselves."
But not everyone views JOBS as an invitation to disaster. Banks have teams of lawyers studying the bill, and many are waiting to see how regulators react.
"The key is to make sure the banker-analyst relationship is properly disclosed and that the SEC carefully monitors the effects of the change," said Robert Glauber, former head of the National Association of Securities Dealers.
"A sweeping prohibition of certain behavior never made sense," Glauber said.