Yves Smith points us to a nice takedown of the woeful JOBS Act, which should get signed into law this week. Chris Hayes had Bill Black and Alexis Goldstein of Occupy the SEC on to talk about it, with Rep. Carolyn Maloney making a (weak) defense. It really was no contest:

You need to watch the full segment to get the effect, but Maloney starts out by saying that the JOBS Act probably won’t create many jobs, but she was nevertheless getting complaints about how costly it was for “small” businesses to hire auditors (earth to base, if they are public, they would not qualify as “small” in most people’s book). Goldsmith devastates Maloney with her command of the bill, pointing out that it covers companies of up to $1 billion in revenues, that the tech companies its backers keep invoking have VC firms ready and willing to invest, and the new format well be used by PE firms flipping companies they had taken private back to public investors. By the end, Maloney is telling Goldsmith to send her suggestions for improved legislation and she’ll put it forward (I’ll believe her sincerity when I see action).

We now have a real-world example of the kind of things we’re going to see with the JOBS Act, and that’s the case of Groupon. The Internet company had a celebrated IPO last year, but its stock crashed after a restatement of earnings from 2011. The company set aside more for refunds than they at first disclosed, limiting their earnings.

But while Groupon had to deliver an SEC filing to explain how they derived their earnings and what accounted for the discrepancies, under the JOBS Act they may not have to do that again:

A little-noticed provision in the new JOBS Act would allow companies to iron out disagreements with regulators behind closed doors before they go public—a provision that might have prevented investors from finding out about Groupon Inc.’s early accounting questions until after they had been resolved.

The provision, part of the bill passed by Congress and expected to be signed by President Barack Obama this week, would enable companies to submit confidential drafts of their initial-public-offering documents to the Securities and Exchange Commission before they file publicly.

Critics say that measure would allow a company like Groupon, which had well-publicized disagreements with the SEC over its accounting last year, to resolve such issues under the radar, without investors learning of them until later although still before any IPO.

The provision is getting increased attention in the wake of Groupon’s disclosure of further accounting problems. The company, which offers discounted deals to consumers, said Friday it was revising fourth-quarter revenue downward and that it had a material weakness in its internal controls, the policies and procedures designed to avoid financial error.

Basically, investors would not be protected by having knowledge about Groupon and companies like it before making decisions on investment. In a post-JOBS Act world, with the crowd-funding option, the company wouldn’t have to make official statements of any kind before raising money from investors. I guess the rebuttal would be some version of caveat emptor, but that’s really not going to fly after the next wave of accounting scandals and rip-offs.

The simple fact is that the JOBS Act accomplishes something around which there was no pressing need – less transparency in the financial markets, and more deregulation.