SEC Commissioners Ask Advisory Committee to Address Decline in Public Issuers

Steven Lofchie Commentary by Steven Lofchie

SEC Chair Gary Gensler, Commissioner Hester M. Peirce and Commissioner Mark T. Uyeda asked the SEC Small Business Capital Formation Advisory Committee to address the issues of the declining number of U.S. IPOs.

In separate remarks to the SEC Small Business Capital Formation Advisory Committee, the Commissioners said that the number of companies going and remaining public has steadily declined since its peak in 1996. As a result, there are fewer opportunities for retail investors to diversify and explore different markets, as retail investors do not have access to private securities offerings.

Mr. Uyeda expressed concern that the growing regulatory reporting burden could be partially to blame for this result and cautioned that the SEC's current agenda, which would impose significant additional reporting requirements for public companies, may further exacerbate the downward trend.

Ms. Peirce questioned the committee on how the SEC can best support entrepreneurial growth, and asked how the SEC can work to revive a dying IPO market.

Mr. Gensler blamed the downward trend in IPOs on economic events, such as the war in Ukraine, the pandemic and the raising of rates by the Federal Reserve Board. "What I am most interested in is the advice you might have for the long-term regarding traditional IPOs, Special Purpose Acquisition Companies (SPACs), and direct listings," said Mr. Gensler.


Mr. Uyeda pointed out that there were more than 8,000 U.S. exchange-listed companies in 1996, a number that fell by almost 50 percent to 4,300 in 2019. Mr. Gensler indicated that the decline in the U.S. public markets could be tied to the war in Ukraine which escalated in February 2022. These comments seem to indicate that the parties are talking past each other. In the alternative, Mr. Gensler may simply believe the decline in the number of public companies is not a reason for concern and so prefers to change the topic, e.g., to SPACs.

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