	Introduction

The JOBS and Investor Confidence Act ( S. 488 ) is a capital markets package consisting of 32 titles that have mostly already passed the House with bipartisan support as standalone bills. A substitute amendment to S. 488 was passed by the House on July 17, 2018, in a 406-4 vote (hereinafter, all discussion of S. 488 refers to the House-amended version of the bill). The package has been referred to as JOBS Act 3.0, following after the initial Jumpstart Our Business Startups Act (JOBS Act; P.L. 112-106 ) in 2012 and the financial services provisions signed into law as part of the Fixing America's Surface Transportation Act ( P.L. 114-94 ), which are referred to as JOBS Act 2.0. 115-174 , many of which are related to capital markets, are included in S. 488 . S. 488 's capital markets provisions are largely focused on smaller companies' access to capital. Capital markets, for purposes of this report, refer to the segments of the financial system under Securities and Exchange Commission (SEC) oversight and in which funding is raised through equity or debt securities. The report divides the 18 provisions into four general categories: (1) expand investor access, (2) reduce compliance costs, (3) promote financial intermediation, and (4) increase investor protection. Two common approaches to expanding capital access are to expand the investor pool or enhance investor communication for private offerings. Some of the S. 488 provisions propose to expand (1) the type of eligible investors by widening the accredited investor definition, as seen in Titles IV and X; and (2) the communication to eligible investors by allowing broader outreach, as seen in Title I. Title I attempts to address the aforementioned concerns related to demo days. Some believe the compliance costs associated with capital markets regulation could potentially outweigh the benefits of being a public company and are disproportionately burdensome for small and medium-sized businesses. In response to these concerns, certain S. 488 provisions aim to reduce (Titles V and IX) or better understand (Titles XXII and XXXI) compliance costs for publicly listed companies. The JOBS Act aims to stimulate corporate capital formation and the number of initial public offerings (IPOs) particularly for emerging and smaller firms. Promote Financial Intermediation

Capital markets consist of numerous players. Between investors and company issuers, who are the end contributors and recipients of funding, there are financial intermediaries that serve to channel funding or execute trades. Some provisions in S. 488 , for example, Titles XXVI and XXXII, promote the use of pooled investment vehicles to channel funding from investors to issuers. For example, Title XXIV would promote investment research of small issuers, and Title XX would create a designated new marketplace, called venture exchange, for smaller issuer stock trading. The SEC promulgated Regulation Crowdfunding pursuant to Title III of the JOBS Act in October 2015. Expanding capital formation allows for greater access of investment opportunities for more investors and increased funding for businesses. There are multiple titles in S. 488 that would create investor protection safeguards as part of a capital formation oriented provision. For example, Titles XXVII and XXIX would provide protection to general investors against corporate insiders and Title XXX would provide targeted protection to senior investors who are victims of financial exploitation.
Capital markets provide financing for businesses to fund their growth that would facilitate innovation and jobs creation, and enhance the society's overall standard of living. They are segments of the financial system in which funding is raised through issuing and trading equity or debt securities, which are forms of financial assets representing ownership or indebtedness of a firm. They are considered the largest source of financing for U.S. nonfinancial companies, significantly larger than bank loans and other forms of financing.
The Securities and Exchange Commission (SEC) is the principal regulator of U.S. capital markets. In recent years, Congress and the SEC began to increasingly direct capital markets regulation away from its traditional "one size fits all" approach. Starting in 2012, the bipartisan Jumpstart Our Business Startups Act (JOBS Act; P.L. 112-106) has scaled regulation for smaller companies and reduced regulations in general for certain types of capital formation. It established a number of new options to expand capital access, including a new provision for crowdfunding. Starting in 2015, parts of the Fixing America's Surface Transportation Act (P.L. 114-94)—referred to as JOBS Act 2.0—provided additional scaled disclosure and reporting related regulatory relief for smaller companies. Following the JOBS Act and JOBS Act 2.0, capital markets regulation has become even more tailored to suit companies of different sizes and with different needs.
However, concerns over capital formation persisted, given that smaller companies continue to face challenges to accessing capital, and the number of initial public offerings (IPOs) remained at far below long-term average levels post-JOBS Act. To address these concerns, Congress has considered numerous legislative proposals to further expand the scaled approach, with some proposals building on existing JOBS Act provisions. The most notable of these proposals is the JOBS and Investor Confidence Act of 2018 (House-amended S. 488), a capital markets package referred to as JOBS Act 3.0. The House replaced the content of the original S. 488 and passed the amended measure by a 406-4 vote on July 17, 2018. The package includes 32 titles, many of which have previously passed the House with bipartisan support as standalone bills. Of the 32 titles, 18 are more capital markets related. They can be grouped under four general categories:
Expand Investor Access. One approach to expand capital access is to expand the investor pool or enhance investor communications. Some of the provisions propose to expand (1) the type of eligible investors by widening certain eligible investor definitions, as seen in Titles IV and X; (2) the number of eligible investors allowed to participate in certain offerings, as seen in Title XXXII; and (3) the communication to eligible investors by allowing broader outreach, as seen in Title I. Reduce Compliance Costs. Some believe compliance costs could potentially outweigh benefits and are disproportionately burdensome for small and medium-sized businesses. In response to these concerns, certain provisions aim to reduce (Titles V and IX) or better understand (required studies in Titles XXII and XXXI) compliance costs for publicly listed companies. Promote Financial Intermediation. Capital markets consist of numerous players. Between investors and company issuers, who are the end contributors and recipients of funding, there are financial intermediaries that serve to channel funding or execute trades. Titles XXVI (a required study) and XXXII would promote the use of pooled investment vehicles to channel funding from investors to issuers. Title XXIV would require a study on investment research of small issuers, and Title XX would create a designated new marketplace for smaller issuer stock trading. Increase Investor Protection. Multiple S. 488 titles would create investor protection safeguards as part of a provision related to capital formation. Other provisions center on investor protection. For example, Titles XXVII (a required study) and XXIX would provide protection to general investors against corporate insiders, and Title XXX would provide targeted protection to senior investors who are victims of financial exploitation.