Seen here: Frontline: Dot Con: Discussion:
Dear FRONTLINE,
One thing that has been overlooked which allowed investment bankers to bring public unseasoned companies was the federal legislation known as the National Securities Markets Improvement Act of 1996 in which Congress preempted merit review standards in states such as California.
Prior to that, companies had to show a record of earnings before being qualified for sale to the general public in such states. Once venture capitalists could take a company public that had never earned a cent, the risk of holding cheap shares until earnings had been achieved was removed. The result was to change the venture capital industry into hot air artists whose basic stock in trade became bullshit.