The number of publicly traded companies in the US has been in decline for many years – to the detriment of all. This is largely due to overly aggressive regulations that boost compliance demands and affiliated cost. At the same time, there is an ocean of private capital that likes to jump to the head of the line to get in early investing in promising young firms. The biggest losers may be smaller investors who are cut out of much of the capital gain equation.
The current leadership at the Securities and Exchange Commission (SEC) aims to “make IPOs great again,” (while also supporting private markets). The SEC is pursuing several updates to their rules that seek to encourage firms to raise money and float their shares on public markets.
This week, the SEC Director of Corporate Finance, Jim Moloney, speaking at the US Chamber Capital Markets Summit, reviewed the Commission’s updates pertaining to public listings so far. Moloney pointed to several initiatives:
- Registered Offering Reform- expanding shelf registration for smaller firms increasing the number eligible by approximately 60%.
- Filer Status Reform – simplifying the current overlapping compliance categories, raising the Large Accelerated Filer threshold from $700 million to $2 billion in public float while reserving the most stringent reviews for only the largest issuers.
Moloney, who previously worked at the SEC, noted that over the years since he left the “layering of disclosure rules and additional requirements” for public registrations is similar to layers of paint in an old home. An apt description. He note that too frequently, new rules emerge due to a panic. Never wast a crisis I guess.
While some in Congress and outside the current administration may not like improvements to markets, the SEC is finally making good progress and executing on their mission of efficient capital markets.
