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November 2, 2020

SEC’s Move to Expand Dark Markets Harms Investors, Public Markets


Monday, Nov. 2, 2020

Contact: Pamela Russell at 202-618-6433 or

SEC’s Expansion of Dark Markets Will Harm Investors and Public Markets

Washington, D.C.  –  Lev Bagramian, Senior Securities Policy Advisor at Better Markets, issued the following statement in response to the Securities and Exchange Commission’s approval of rules that will expand the ability of private companies to solicit investments from retail investors:

“Instead of cutting back on exemptions to encourage more companies to go public, which would create more high-quality investment opportunities for retail investors and provide stable funding for promising companies, the SEC does the opposite and approves a package of rules that encourages companies to stay private or ‘go dark.’

“These changes—misleadingly marketed in the name of increasing investment opportunities for retail investors—will, more often than not, enable intermediaries to reap huge commissions by peddling unsuitable investment products to unsuspecting investors. This will allow companies and their executives to plunder the hard-earned savings of ordinary Americans with no real benefit of sensible and sustainable economic growth.

“Among the harmful changes is one that will enable foreign companies—including companies domesticated in China with questionable accounting practices—to raise hundreds of millions of dollars a year from U.S. investors without providing audited financial statements. Many of the changes re-write Congressionally set investment limits—which essentially means the Commission rewrote the law that created these very specific and limited exemptions. This approach to policymaking alone is sufficient grounds for Congress or a future Commission to undo these dangerous changes.

“These changes—sold in the name of capital formation—will expose investors to the risks of investing in companies that have funding challenges and prefer to not disclose information about their financial condition or growth prospects. Many of these companies have been turned down by angel investor groups, community banks or credit unions, national banks, presumably all Federal funding programs, venture capital funds, private equity funds, business development companies, strategic acquirers, and other institutional investors. Yet, the Commission wants us to believe that retail investors, with their limited investable assets and ability to access or analyze information, are better positioned to invest in these types of companies than the “smart money” groups, which have declined to invest in these companies. This, of course, cannot be right, and those who peddle this myth are doing a disservice to hard-working Americans across the country.”


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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