SEC Chair Details Plan to Revive U.S. IPO Market
Commentary by Steven Lofchie
At a House Financial Services Committee oversight hearing, SEC Chair Paul Atkins outlined reforms to reduce regulatory burdens on public companies and to revitalize the IPO market.
Mr. Atkins argued that regulations have "multiplied faster than the problems that they were intended to solve," citing approximately $2.7 billion in annual public-company reporting costs that could otherwise be reinvested in growth. He said the SEC was (i) refocusing disclosures on material information to reduce "regulatory noise;" (ii) limiting shareholder meetings to core corporate matters; and (iii) creating litigation alternatives to deter frivolous suits. He also said the SEC was looking to reduce regulatory overhead, citing a 9.4 percent PCAOB budget cut and directing a review of the Consolidated Audit Trail to address cost and data security concerns.
Further, Chair Atkins emphasized that the Commission was returning its enforcement program to first principles, focusing on fraud, insider trading, and cross-border misconduct to protect investors and maintain market integrity.
House Financial Services Committee Chair French Hill commended the SEC's shift away from the previous administration's "regulation-by-enforcement" approach. Mr. Hill argued that prior politicized rulemakings contributed to a decline in publicly listed companies and drove innovation offshore. He highlighted the advancement of the INVEST Act as a legislative complement to the SEC's internal reforms, stating that the shared goal was a marketplace where "American businesses can access capital to innovate, expand, and create jobs."
Commentary
Mr. Atkins' approach marks a significant and welcome change from that of the SEC under his predecessor. Former Chair Gensler acknowledged that issuers increasingly preferred staying private to going public; however, the only means by which he considered addressing this preference was to increase the regulatory requirements on private issuers to make staying private more burdensome. He never considered whether it was possible to decrease the regulatory requirements on public issuers to make going public more attractive.
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