Manchester United Shows How The JOBS Act Opens The Door To Fraud

A longstanding Republican canard is that overregulation has deterred companies from doing business in the United States. Now, thanks to the economic safeguard-destroying Jumpstart Our Business Start-Ups (JOBS) Act — crafted by House Republicans and signed into law in April — America’s newly deregulated IPO market has become an unfortunate haven for companies seeking lower compliance costs.

One such international company, the English soccer club Manchester United, is filing to go public on the New York Stock Exchange, and will benefit from the lax regulation that America now offers. The JOBS Act weakens protections put in place in the early 2000s after Enron and similar scandals. Under the law, Manchester United — which earns less than $1 billion in revenue — classifies as an “emerging growth company,” thus avoiding more stringent business regulations.

As the New York Times’ Dealbook notes, United will be exempted from many American securities laws:

Manchester United will not need to file quarterly reports, report material events, file proxy statements or disclose extensive compensation information, all of which American companies must do. Under a different S.E.C. rule adopted in 2008, Manchester United also does not need to report financials under the generally accepted accounting principles used in the United States, but can instead rely on international financial reporting standards.

Critics of the JOBS Act warn that the slackening of reporting requirements of IPO companies increases the likelihood of fraud and manipulation. Even a majority of bankers believe the law opens the door to accounting scandals.


For the Glazers, the American family that owns Man U., the U.S. can also offer a much more attractive shareholder structure than other nations. As it stands, United’s ownership is saddled with $655 million of debt and is largely unpopular with fans. The Glazers may be willing to sell shares to reduce their debt, but they do not want to relinquish voting control over the company. America’s “dual-class” shareholder structure — where the Glazers could get 10 votes per share versus one vote for a public investors’ share — would mean they won’t have to.

Steven Perlberg