Over the last several decades, the SEC’s steadily expanding exemptions from the registration requirements in the U.S. securities laws have shifted capital-raising activities between two parallel markets. One is an expanding private or exempt securities market that is dark, mostly unregulated, and accessible on a limited basis. The other is a shrinking public securities market that is transparent, well-regulated, and broadly accessible. The report and supporting fact sheet provide an overview of private markets’ present dominance over the public markets, which undermines investor protection, transparency, and liquidity.
Topics covered in the report include:
- The steady expansion of private markets at the expense of the public markets;
- The conceptual distortions that underlie the exemptions from registration;
- The lack of transparency surrounding private offerings, which harms the SEC as well as investors; and
- The benefits of the public markets.
Expanding unregulated private markets at the expense of public markets threatens the integrity and vitality of our capital markets and ultimately the financial lifeblood of our economy. Better Markets calls for the SEC to halt any further expansion of the private markets and to begin scaling back those exemptions that are now in place.