Acting SEC Chair Highlights Regulatory Shifts and Reform Priorities

Acting Chair Mark T. Uyeda outlined the agency's new priorities grounded in reducing regulatory barriers for small and private companies.

In an address before the Florida Bar's Annual Federal Securities Institute and M&A Conference, Mr. Barr asserted that the past Administration "was a stark aberration from longstanding norms as to what the Commission has historically viewed its legal authority, policy priorities, and use of enforcement." He said the SEC "has begun the process of returning to its narrow mission," by (i) removing Staff Legal Bulletin No. 14L (see related coverage); (ii) rescinding Staff Accounting Bulletin No. 121 (see related coverage); (iii) launching a crypto task force (see related coverage); (iv) directing staff to notify the Eighth Circuit Court to delay scheduling in a case involving a consolidated legal challenge to the climate-related disclosure rule (see related coverage); (v) exempting certain personally identifiable information from being collected by the Consolidated Audit Trail (see related coverage); and (vi) continuing its enforcement work.

Mr. Uyeda highlighted the following priorities:

Improving Capital-Raising Opportunities for Entrepreneurs. Mr. Uyeda said the SEC must implement "practical and cost-effective regulations" to help entrepreneurs raise capital efficiently. While Regulation Crowdfunding was intended to make capital raising easier for startups, he stated that it has "probably not" achieved its goal, noting that despite existing exemptions, 77% of small business owners still worry about accessing capital. He directed SEC staff to explore "targeted regulatory changes" to simplify compliance and reduce costs, emphasizing that startups raising $5 million should not have to spend over $500,000 on legal and compliance fees.

Empowering Retail Investment in Private Companies. On the accredited investor definition, Mr. Uyeda said that "96% of rule 506(b) offerings excluded non-accredited investors" due to additional disclosure requirements. He noted various proposals that have suggested modifying the definition, such as indexing financial thresholds to inflation or allowing investors to qualify through education or certification. Mr. Uyeda questioned whether an "all or nothing" approach makes sense, suggesting a "sliding scale" that would allow all investors to allocate at least some capital to private companies.

Making IPOs Attractive Again. Mr. Uyeda said that fewer companies are going public and attributed the decline to stricter antitrust enforcement and regulatory burdens. He criticized the SEC for failing to provide adequate relief for Emerging Growth Companies ("EGC") in recent rule changes and asked SEC staff to review the EGC definition and propose reforms.

Scaling Public Company Disclosure Requirements. Mr. Uyeda argued that the SEC's disclosure rules impose disproportionate burdens on smaller companies. He pointed out that a company with a $250 million public float faces the same reporting requirements as one with a $250 billion float. He also criticized overlapping definitions of filer categories. Mr. Uyeda said the SEC should "re-align" these categories and tailor disclosure rules to reflect the realities of today's public companies.