WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with the Securities and Exchange Commission proposing rule changes that would reduce public company disclosures:

“The SEC continues its assault on investors. Under the guise of modernizing its framework for registered securities offerings, the SEC proposes to allow public companies to provide investors with less information. Yet the SEC itself recognizes that the purpose of the federal securities laws is to protect investors by requiring ‘full and fair disclosure’ in public markets, and it is this transparency that has made our public markets the envy of the world.

“The SEC recognizes further that its proposed rule changes could lead to ‘issuer behavior that results in harm to investors.’ It acknowledges that the proposed changes ‘could create opportunities for some issuers to mislead the market,’ and as examples it cites a possible increase in ‘pump-and-dump schemes or other forms of fraud and insider manipulation.’ It also states explicitly that the proposed change that would preempt state law registration and qualification requirements ‘removes an additional layer of investor protection.’

“The reason to expose investors to these risks, according to the SEC, is the need to increase the number of public offerings. The SEC believes that the current rules governing public offerings prompt some issuers ‘to raise capital through other means, such as an exempt offering or private financing.’ As we have said previously, however, the reason companies choose to stay private today is because the SEC has expanded the private markets to the point that companies can raise as much money as they need without accessing the public markets. It is the expansion of the private markets that has led to companies shunning public offerings, and it is this expansion that the SEC does not address in today’s proposals.

“Indeed, the SEC says that ‘the regulatory burdens and costs of being a public company’ are among the factors ‘influencing companies that might previously have gone public to remain private.’ Yet studies show that regulatory costs are not the reason for the recent decline in the number of initial public offerings. Rather, it is the ‘growing availability of private funding.’

“Chair Atkins says today’s rules are part of his plan to Make IPOs Great Again. He cannot do that without curbing the private offering exemptions that allow companies to raise unlimited sums privately. In the absence of such reforms, all today’s proposals will do is allow public companies to provide less information to the public, thus endangering investors.”

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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