SEC Chairman Paul Atkins on Why Public Companies Are Vanishing

Decline in Public Companies

• 📉 The number of public companies in America has halved over the last 30 years.
• 🏦 This decline is attributed to bankruptcies, mergers, acquisitions, and the rise of a robust private marketplace for credit and equity.
• 💰 Companies can now stay private longer, with going public often serving as a way for initial investors to cash out.

Obstacles to Going Public

• ⚖️ Cost and complexity of the disclosure framework and SEC rules are significant deterrents.
• 🎯 The SEC aims to rightsize its rulebook, moving away from a one-size-fits-all approach and focusing on what a reasonable investor needs to know.
• 🏛️ Both Congress and the SEC have contributed to an expanded rulebook over the years.

Key Inhibiting Factors

• 📝 Excessive disclosure requirements are overwhelming for investors trying to compare companies.
• 🧑‍⚖️ Litigation is a major concern, with lawyers often pursuing public companies due to the availability of capital.
• 🗳️ Weaponization of corporate governance, particularly around annual shareholder meetings and advisory proposals, creates unnecessary costs and burdens.

SEC's Path Forward

• 🔍 The SEC is initiating a project to review and potentially streamline disclosure requirements, starting with executive compensation.
• 🤝 The goal is to make the process more comprehensible and less burdensome for both companies and investors.
• ⚖️ Addressing litigation involves exploring avenues like mandatory arbitration and fee-shifting, though states largely dictate these policies.
• 🚀 The SEC is committed to making IPOs more appealing and accessible again.