SEC Commissioner Stein Discusses Capital Formation
SEC Commissioner Kara M. Stein delivered remarks at the "Live from the SEC" Conference, discussing the global perspective of capital formation, crowdfunding, and the Global Legal Entity Identifier ("LEI") initiative.
Commissioner Stein explained that capital formation opportunities come in all "shapes and sizes" and encouraged the SEC to "construct a sensible and well-integrated path in which each step provides strong footing for the next." She stated her concern that the "patchwork quilt" of rules and exemptions has become overly complex and exposes investors to a range of risks.
Commissioner Stein spoke about the international components of capital formation. One area highlighted was crowdfunding. She explained that the Internet brings "investors and businesses together in a way to help provide capital for start-ups and small businesses." In light of this, she recommended that the SEC create the right protections through structure requirements and disclosure in order to protect investors from various forms of cyber fraud. Additionally, Commissioner Stein recommended that the SEC watch developments across jurisdictions in order to analyze how various approaches are working. She noted her interest in the United Kingdom's "collective investment scheme," which permits the use of pooled funds.
According to Commissioner Stein, the LEI initiative is imperative to assist in risk analysis, supervision, and regulation, and can greatly strengthen and improve a firm’s internal risk management. She explained that the initiative has a "remarkable power to provide a new dimension to transparency" by enabling managers and regulators to instantly and precisely identify parties to financial transactions.