Securities and Exchange Commission (SEC) Chairman Paul Atkins outlined his vision for the year, focusing on how capital markets support American economic leadership and founding principles. Chairman Atkins maintained that the agency should follow its statutory mission and enact regulations to protect investors and promote capital formation.
The Chairman highlighted key priorities, including:
1) Reversing the decline in public companies
“Shortly after I left the SEC as a staff member in the mid-1990s, there were more than 7,000 companies listed on the U.S. exchanges, from small-cap innovators to giants of industry. Yet by the time that I returned as Chairman earlier this year, that number had fallen by roughly 40 percent…the path to public ownership has become narrower, costlier, and overly burdened with rules that often create more friction than benefit.”
The Chamber has long been concerned about the dwindling in public ownership and testified on several occasions before Congress. Although significant progress has been seen through the Jumpstart Our Business Startups (JOBS) Act, additional reforms are needed. Last summer, the Chamber released a report that contained over a dozen recommendations on encouraging companies to go and stay public.
2) Realigning disclosure requirements with the Supreme Court’s materiality standard
“The SEC has weaponized the disclosure regime that Congress created for our marketplace…These decades of accretive rulemakings have produced reams of paperwork that can do more to obscure than to illuminate.”
While materiality seems abstract within securities law, it’s actually a bedrock principle of capital markets. Materiality standards allow investors to gather crucial business information through corporate disclosure. The Chamber released reports calling on the SEC to reaffirm the materiality standard and supported efforts in Congress to ensure new disclosure mandates meet this standard.
3) De-politicizing regulatory agendas
“We need disclosure that is calibrated for a company’s size and maturity; that is driven by market demands; that is rooted in materiality and not whimsical social or political agendas.”
The Chamber lead calls for changes to the shareholder proposal system governed by the SEC under Rule 14a-8, which activists use to pressure public companies over political or social issues that have nothing to do with shareholder return. The Chamber commended the SEC’s issuance of the Staff Legal Bulletin 14M and encourages further changes to this rule.
Chairman Atkins' speech signals a bright future for U.S. capital markets. The SEC can count on the Chamber's collaboration as they advance this positive agenda.
