Warren, Van Hollen Call on SEC to Abandon Counterproductive Deregulatory IPO Agenda Putting Families and Investors at Risk

Warren, Van Hollen Call on SEC to Abandon Counterproductive Deregulatory IPO Agenda Putting Families and Investors at Risk

"Taken together, your 'making IPOs great again' agenda is part and parcel of the Trump Administration's approach to our financial markets: make it easier for the President's billionaire donors and corporate executives to avoid accountability or transparency, while leaving regular investors in the dark."

Text of Letter (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, and Senator Chris Van Hollen (D-Md.), member of the Committee, wrote to Securities and Exchange Commission (SEC) Chair Paul Atkins with concerns that a recent slate of deregulatory proposals purportedly aimed at "making IPOs great again" would reduce transparency, damage investor confidence, and undermine the integrity of America's capital markets.

In May, Chair Atkins announced an effort to "Make IPOs Great Again" and encourage more companies to "go and stay public." While the policy initiative aims to reverse the decline in publicly-listed U.S. companies over the past three decades by reducing public-market disclosures and requirements, research shows that deregulation in the private markets is a key reason why fewer companies have gone public. The Senators note that the SEC's proposals would be counterproductive and risk exacerbating the decline in public companies.

"While we share the goal of revitalizing the public markets and providing more companies with the opportunity to go public, the ill-conceived deregulatory measures you have taken will not revive or sustain a healthy IPO market," wrote the Senators. "These proposals would ultimately erode the very framework of transparency and investor protections that makes our public markets so appealing to investors the world over."

"Your proposals posit that the compliance burden of the robust regulations and disclosures required in the public markets is the sole reason that companies choose to stay private," the Senators continued. "Academic research has repeatedly discredited your theory and found that more - not less - disclosure from public companies can make markets more liquid, is rewarded by investors with greater returns, and associated with larger stock markets. Moreover, research has shown that deregulation in the private markets is a key reason for why companies do not go public."

"Our capital markets thrive when more companies go public and go public earlier. Transparency and robust disclosure in our public markets facilitates a more trustworthy and efficient market where Main Street investors are more willing to provide capital because they have faith in the integrity of public markets," wrote the Senators. "Our goal should be bringing as much capital raising as possible into our public markets to provide more growth opportunities for American companies and more wealth-building opportunities for the broadest range of American investors."

"As the SEC guts regulations protecting investors from untested issuers, the Commission is simultaneously 'reliev(ing) a significant portion of all publicly traded issuers from making a wide variety of disclosures that they are currently required to provide,'" the Senators continued. "The result of this wholesale rollback of required disclosure requirements would almost certainly increase the level of fraud and raise the cost of capital."

The Senators requested that the letter be added to the comment file for all four of the SEC's proposed deregulatory rules.

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