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April 18, 2023

Fact Sheet: Expanding Private Markets Undercuts Public Markets, Investor Protections, and Capital Formation

WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on Better Markets’ release of a fact sheet, Expanding Private Markets Undercuts Public Markets, Investor Protections, and Capital Formation, before a House Financial Services Committee, Capital Markets Subcommittee hearing entitled “A Roadmap for Growth: Reforms to Encourage Capital Formation and Investment Opportunities for All Americans.”

“For years, securities offerings have been made increasingly in the shadows, not in the public offering markets.  That harms investors by depriving them of mandatory public disclosure of material information by issuers, access to public trading venues like exchanges that provide reliable pricing and liquidity, and strong legal obligations and remedies for investors when they have been victimized by dishonest promoters. The solution is to restore the preeminence of the public markets, not create yet more avenues for opaque and high-risk private offerings.

“Our fact sheet shows that over the last several decades, Congress and the SEC have steadily expanded the exemptions from the laws and regulations governing public offerings.

Currently, more than two-thirds of new capital raising in the U.S. securities markets occurs in private markets.  And the majority of those offerings are made under rules that require little meaningful information to be filed even with the SEC.  As highlighted in our fact sheet and in our more detailed report, these private offerings can mask huge problems with the issuing companies, including the likes of Theranos and FTX.

“Thankfully, the SEC is planning a number of reforms that will help reverse or at least slow these trends.  They include improving the Form D, expanding the number of companies that must file public reports, and adjusting rules that govern the resale of restricted securities issued in private offerings. It is also past time for the SEC to update the “accredited investor” definition so that it serves as a more meaningful standard for determining which investors have the knowledge and financial depth to understand and absorb the heightened risks that come with private offerings.

“Finally, the SEC should undertake a comprehensive analysis of the pros and cons of its current exempt offering framework and pursue other reforms as necessary to better protect investors, market integrity, and capital formation.”

Read the Fact Sheet here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes [Americans’ jobs, savings, retirements and more. To learn more, visit

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