What if Congress passed a law but no one listened?

That seems to be what happened with the JOBS Act passed by Congress and signed by the President last year.

The “Jumpstart Our Business Startups Act” (H.R. 3606) was passed by the House of Representatives in March 2012 with an overwhelming vote of 380 to 41. The measure had previously passed the Senate with a bipartisan majority.

President Obama signed the Act a few days later calling it a “game-changer” and that the measure “represents exactly the kind of bipartisan action we should be taking in Washington to help our economy.”

The Act amended the Securities Act of 1933 in several respects, including by creating a new exemption from registration to allow small business to raise funds via sales of securities directly to the public through a “crowd-fund portal”. This new entity – the crowd-fund portal – was to be defined by regulations promulgated by the SEC. According to the President, “Because of this bill, start-ups and small business will now have access to a big, new pool of potential investors — namely, the American people. For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.” (For a crowdfunding backgrounder, see Dara Albright’s site).

Among other changes to securities laws, the Act opened the door for private companies to publicly advertise the availability of investment opportunities in their securities (a practice known as “solicitation” and previously banned under the Securities Act of 1933). Removing the ban on solicitation was intended to make it easier for private companies to locate potential “accredited investors” who would be qualified to invest in exempt offerings of their securities under Regulation D.

Knowing that it would be necessary for the SEC to promulgate regulations to implement these changes, Congress specifically obligated the SEC to adopt rules promptly. In Section 201 of the Act Congress required the SEC to “revise its rules” with respect to the ban on Regulation D solicitations “not later than 90 days after the enactment of this Act.”

Also, in Section 301 of the Act, Congress required the SEC “not later than 180 days after the enactment of this Act” to issue such rules as may be necessary to carry out the amendments contained in Section 301 of the Act.

Despite these clear instructions, nearly a year after passage of the law, the SEC has failed to implement these regulations. When pushed for an explanation, SEC appointees have suggested that they disagree with the law’s aims and fear that it will harm their “legacy.” (WSJ; Wired).

Does it bother anyone else that the SEC believes it is entitled to pick and choose which laws it has to follow and that it does so on the basis of the perceived “legacy” that its political appointees believe they have?

(Cross-posted from PointOfLaw).