A bill backed by President Obama and largely drafted by some of his Silicon Valley donors is causing an embarrassing rift in his party's ranks and creating an awkward situation as Democratic leaders in the Senate try to make last-minute changes today before sending it to the White House.

Proponents of the bill say it will drive capital to startups by reducing the barriers to going public. Opponents say it invites potential fraud and reduces transparency for most business seeking an IPO—not just small ones. 

On Wednesday, one day after the Democrats failed to pass their own version ...