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Tech companies new lobbying force in DC

Big Technology is the new Washington powerhouse.

In the last few months, the tech industry has won some of the biggest debates and legislative battles in Washington, from protesting the Stop Online Piracy Act to last week’s passage of the JOBS Act.

With SOPA, Google led the charge to kill the bill that was pushed by an old-school Washington power player — the entertainment industry. The Jumpstart Our Business Startups Act passed with support from major Silicon Valley figures like AOL founder Steve Case and Twitter.

Despite some persuasive arguments in favor of SOPA and against the JOBS Act, the House and Senate agreed with the silicon side in both instances, thanks to successful lobbying and the tech industry’s influence; tech is the fifth-largest spender in Washington.


President Obama is set to sign the JOBS Act this week, after the bill won broad bipartisan support in both the House and Senate. The bill’s provisions legitimize online crowdfunding, ease IPO regulations for small private companies, relax solicitation rules for private securities and eliminate certain shareholder requirements that push companies to go public.

The bill passed despite concerns raised by the Securities and Exchange Commission, which prior to the vote uncovered alleged incidents of fraud involving pre-IPO stock transactions.

The JOBS Act is expected to foster more trading in private-company stock because it raises the number of shareholders a company can have from 500 to 2,000 before it has to disclose its financial data to the SEC.

Also, employees with stock options are exempt from the tally.

The new bill essentially eliminates the threshold that prods companies to go public by forcing them to report financial results, according to regulation experts and Washington observers.

“The whole policy behind securities laws is that companies should disclose information to people investing in them,” said a securities lawyer, speaking on the condition of anonymity. “With the new limit at 2,000, there will be more people out there buying and selling stock in companies in which they have no information whatsoever.”

The shareholder rule almost didn’t make it into the JOBS Act, according to a lobbyist who worked on the bill.

Twitter became one of the biggest proponents of lifting the count and is the prime example of a company that is expanding its shareholders with employee stock options and private trading.

Twitter CEO Dick Costolo signed a letter to Congress, along with dozens of Silicon Valley entrepreneurs, supporting the new rules.

Twitter even had discussions with the White House, whose initial version of the bill did not include the shareholder provision, according to the lobbyist.

New York City’s SecondMarket was another player in pushing the legislation. The firm operates an exchange for trading shares in private companies, a platform that bloomed first with Facebook shares.

The firm lobbied hard, spending more than $200,000 and substantial time in Washington, to advance the legislation. SecondMarket hopes it will lead to more trading of shares in companies that remain private for longer periods of time.

The company is looking for new opportunities since Facebook decided to go public, robbing it of a cash cow and leading to layoffs, which were announced Friday.

Advocating bills like SOPA and JOBS cost the tech industry $125 million last year, according to OpenSecrets.org.

This is just the beginning of tech’s influence, said one source, who sees all of K Street looking to woo Silicon Valley dollars. The landscape is changing, too, with the likes of Google and Facebook opening offices in the capital.

The next major legislative movement for tech could be over online privacy and tracking Web habits, an issue at the heart of social networking and search engines.

Google, Facebook and others will now focus on trying to control that debate, and with two tech victories already, a third win is possible, the lobbyist said.

“A lot of people come to Washington and spend a lot of money, but are not successful. These guys were,” he said.


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Source: http://www.nypost.com/p/news/business/flexing_muscles_tezyRbXXee4BuGpqV9StUK
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