In a speech delivered yesterday at the Texas A&M Corporate Law Symposium, SEC Chairman Paul Atkins provided some details about the kind of disclosure reforms he wants the agency to pursue. I’m going to take these one-by-one and try to summarize the key points Chairman Atkins raised during his remarks. But he had quite a bit to say, and you should definitely read his speech in its entirety. Anyway, let’s get started.
Executive Comp Disclosure. Chairman Atkins said that the three principles driving the SEC’s efforts to reform executive comp disclosures were rationalizing, simplifying and modernizing the rules governing those disclosure requirements. In terms of rationalizing the rules, he said that materiality should be the SEC’s “north star,” and stated that the current requirement to provide detailed compensation information for up to seven people isn’t consistent with that objective. He said that he agreed with commenters who said that the number of executives for whom compensation info is required should be reconsidered, and that the level of disclosure should be calibrated with its cost.
Chairman Atkins singled out the PvP disclosure rules when discussing the need to simplify compensation disclosures. He said that SEC disclosure requirements should be “intelligible by a reasonable investor and practical for a company to comply [with], without the need for a cottage industry of ultra specialized consultants,” and that the current PvP disclosure rules flunked this test.
With respect to the need to modernize comp disclosures, the Chairman called out the current treatment of executive security arrangements as a “perk.” He pointed out that we live in a different world than the one 20 years ago when the SEC decided that executive security arrangements were not “integrally and directly related to job requirements,” and that the SEC’s rules needed to keep up with modern business realities.
Regulation S-K. Chairman Atkins called out “disclose or comply” line items that indirectly compel companies to toe the line on specific governance practices by forcing them into awkward disclosures if they don’t. He cited some of Item 407’s requirements, such as the need for a company without a nominating or compensation committee to explain why that structure is appropriate, as examples of this kind of “shaming disclosure.”
Chairman Atkins characterized these requirements as an “attempt to indirectly regulate, or set expectations for, matters of corporate governance.” He said that absent a Congressional mandate, it wasn’t the SEC’s role to enforce evolving “best practice” governance standards through disclosure requirements.
Chairman Atkins also cited provisions of Reg S-K that forced companies to comply with impractical disclosure requirements, such as the need to track down beneficial ownership information for NEOs who departed during the prior year in order to complete the current year’s beneficial ownership table in the proxy statement required by Item 403. He also cited the broad definition of “immediate family members” used in Item 404’s related party transactions disclosure requirements as imposing potentially impractical obligations on public companies.
Risk Factors. The final disclosure reform topic that Chairman Atkins addressed was the need to curb the relentless expansion of risk factor disclosures. He suggested that the solution depends on whether one views risk factor disclosure as primarily a tool to communicate what management believes are the material risks facing the business to investors, or a means to establish litigation defenses.
If the former, Chairman Atkins suggested that one approach might be for the SEC or the company itself to “maintain a set of risks, which could be published separately outside of the annual report, that broadly apply to most companies across most industries,” which would serve as a sort of “general terms and conditions” for investments. If the latter, then he suggested the solution might lie in adopting a safe harbor “stating that failure to disclose impacts from publicized events that are reasonably likely to affect most companies” won’t create liability under the securities laws.
My guess is that we shouldn’t read the Chairman’s comments on these topics in isolation. For example, the principles of rationalizing, simplifying & modernizing disclosure requirements likely have application to the SEC’s review of Reg S-K line items beyond Item 402. Similarly, Item 407 isn’t the only S-K line item that involves potential “shaming disclosures” (Items 405 and 408 comes to mind). Some of those line items may also get a close look from the SEC, although they may have policy justifications that don’t involve pushing governance “best practices.”
As for the ever-expanding length of risk factor disclosures, I’m not sure there’s a comprehensive fix to this problem. The SEC can only protect companies from liability under the securities laws, and unfortunately, that’s not the only source of potential disclosure-related claims public companies might face.
Chairman Atkins also gave a shoutout to Texas for its recent legislative efforts at corporate reform, and for its enactment of SB 29 in particular. Among other things, that statute allows Texas corporations to include jury waivers and exclusive forum provisions in their charter documents.
It looks like Jim Moloney wasn’t kidding around when he said in his recent statement that we should expect “a steady stream” of staff guidance in the coming months. Yesterday, Corp Fin issued 10 new Reg A CDIs and withdrew one existing CDI and issued five new Regulation Crowdfunding CDIs. Here are links to the CDIs, along with a brief description of the topics addressed in each of them:
Securities Act Rules CDIs Section 182. Rules 251 to 263
Withdrawn Question 182.05 – Addresses eligibility of voluntary filers to use Reg A. (Withdrawn CDI predates amendments permitting reporting companies to use Reg A).
New Question 182.24 – Permits any issuer in a Reg A offering to submit draft offering statements for non-public review by the staff of the Commission regardless of whether it has previously sold securities under Reg A or in an effective registration statement.
New Question 182.25 – Permits an issuer to convert from a Tier 1 to a Tier 2 offering via a post-qualification amendment.
New Question 182.26 – Addresses when a reporting issuer must include interim financial information from its Exchange Act reports in its Form 1-A for periods more recent than those required to be presented.
New Question 182.27 – Addresses updating the amount of securities offered on the cover page of an offering circular when filing a post-qualification amendment to account for the actual amount an issuer can sell pursuant to Rule 251(a) on a going forward basis.
New Question 182.28 – Addresses advertising of Reg A offering on TV or radio, or through online ads featuring audio or visual components.
New Question 182.29 – Addresses when “testing the waters” materials are not required to be filed as exhibits.
New Question 182.31 – Addresses when securities underlying convertible, exercisable or exchangeable securities to be issued in a Reg A offering must be qualified and included in the aggregate offering price of at the same time as the overlying securities.
New Question 182.32 – Addresses when offers and sales must be suspended during the waiting period for a post-qualification amendment.
New Question 182.33 – Clarifies that exhibits may not be filed as attachments to offering circulars and addresses the procedure for filing exhibits.
Regulation Crowdfunding CDIs Rule 100 and Rule 201
New Question 100.03 – Addresses when a Reg Crowdfunding issuer may move its offering from one intermediary’s platform to another’s platform prior to making any sales.
New Question 100.04 – Clarifies that Rule 100(b)(2) will not disqualify former Exchange Act reporting company from relying on Regulation Crowdfunding.
New Question 100.05 – Addresses how the start of the 12-month period in Rule 100(a)(1) for purposes of calculating the maximum aggregate amount of securities that can be offered is determined.
New Question 100.06 – Addresses how the “annual” period is calculated for “annual income” in Rule 100(a)(2).
New Question 201.03 – Addresses annual updating requirements for Reg Crowdfunding offerings.
Check out our latest “Timely Takes” Podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:
– New Voting Guidelines from Vanguard & BlackRock
– Evolving Proxy Advisor Landscape
– Rule 14a-8 No Action Process Update
– AI Disclosure Trends & Considerations
– Section 16(a) Reporting for FPIs
As a bonus, J.T. also discussed the SEC’s decision to solicit comments on a potential overhaul of Regulation S-K.
As always, if you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share in a podcast, we’d love to hear from you. You can email me and/or Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.
Corp Fin Director Jim Moloney is a SoCal guy, so it’s not surprising that, in a recent statement, he delivered a series of Hollywood-style teasers for the SEC’s regulatory agenda. Here’s how he teed up his discussion of the agency’s “coming attractions”:
Steven Spielberg is directing a movie called Disclosure Day, coming this summer to a theater near you. As I keep telling my team, the changes you will see emerge from the Securities and Exchange Commission by way of the Division of Corporation Finance (the “Division”) will be the equivalent of a series of blockbuster movies, reminiscent of Spielberg’s greatest hits. He may have already taken the perfect title for one of our movies, but you can expect our very own “disclosure day” releases. And while Spielberg and I have very different plots in mind for our productions, I promise you that our releases will be just as thrilling. It’s time to leave some of these burdensome regulations on the cutting room floor.
Director Moloney then got down to specifics, which included Spielberg references aplenty! Here are some of the highlights:
– Crypto: Director Moloney recalled Commissioner Uyeda’s remarks comparing what the crypto industry has been dealing with from a regulatory standpoint to Jaws – “a dangerous sea with the ever-lurking threat of regulation by enforcement.” He said that Corp Fin is preparing to address that through interpretive guidance providing a taxonomy for crypto assets and a framework for determining when those assets are securities.
For those crypto assets that involve investment contracts, Corp Fin is also “working on a proposal that will seek to provide a rational regulatory structure for the offer and sale of those securities.” Hearing all this after the Gensler years, I bet the crypto bros feel like they’re living a true “Cinderella Story” that will help warm their hearts while they endure yet another bitterly cold crypto winter.
– Reg S-K: Director Moloney kicked off his comments on S-K reform by noting how shocked securities lawyers of another era would be if they were transported here, like E.T., and discovered how SEC disclosure documents have been transformed: “The overall length of proxy statements and periodic filings – not to mention compliance costs – have skyrocketed over the past decades, creating massive documents that would be alien to those who created our disclosure regime.” If that remark doesn’t resonate with securities lawyers enough to have a chorus of them chiming in with “I’m Spartacus!” I’ll eat my hat.
Getting down to brass tacks, Director Moloney went on to say that the SEC is looking for “targeted, concrete recommendations to reduce immaterial disclosure and encourage companies to focus on information that is material to investors.” This is a once in a lifetime opportunity, gang – so get your pencils out!
– Semi-Annual Reporting. Director Moloney supplied another Hollywood analogy for past efforts at revamping quarterly disclosure requirements, comparing them to Spielberg’s 2004 film “The Terminal.” That film recounts the story of a man trapped indefinitely at JFK airport by politics & bureaucracy. He went on to say that the SEC means business this time and observed that “It’s time to leave the airport at last and travel forward with a formal rulemaking.”
– Foreign Private Issuers. Director Moloney said that Corp Fin was scrambling to adopt rules surrounding the new Section 16(a) reporting obligations imposed on directors and officers of foreign private issuers, and also discussed the Commission’s review of input received on its concept release on FPIs. He said that Corp Fin was wrapping up its review of comments received on the release and was preparing a recommendation to the Commission on a rule proposal.
In his discussion of FPI rulemaking, Director Moloney said that as in Indiana Jones, “distant foreign lands offer unexpected changes, excitement, and adventure.” My guess is that some of these current & potential changes in the rules may make the FPIs on the receiving end of them feel as dislocated as the newcomers to America in Jim Jarmusch’s “Stranger than Paradise.”
Director Moloney went on to say that we “shouldn’t expect a quiet summer ahead,” and that in addition to this series of rulemaking blockbusters, we should expect “a steady stream” of staff guidance in the coming months “that will continue to help companies, their advisors, investors, and other market participants more efficiently navigate our rules.”
He closed out his statement by noting Corp Fin’s disclosure review program and the status of efforts by the staff to claw their way out of the backlog created by the government shutdown, and discussing the results (so far) of Corp Fin’s decision to back away from refereeing the shareholder proposal process. I could discuss these parts of his statement in more detail, but this blog is long enough and when you get to Jim Jarmusch, you know you’re running out of movie references.
Suffice it to say that the SEC has a ton on its plate – and it looks like a lot of this is going to end up on all of our plates over the course of the next several months. Gosh, if only there was a conference in the fall that brought together the top securities lawyers in the country to share their insights about all the regulatory developments that are going to unfold over the course of the next few quarters. . . Oh, wait a minute – I just remembered, there is one!
Last month, I blogged about the SEC’s approval of a PCAOB budget that slashed the compensation of the PCAOB’s board members. Over on “The Audit Blog,” Dan Goelzer provides a little historical background on how positions on the PCAOB board came to be so lucrative, and discusses some of the potential implications of the pay cut on the PCAOB’s oversight mission.
While acknowledging that the reduced compensation for board members and senior staff will discourage applicants who are primarily attracted by a high salary and don’t have any special commitment to advancing the public interest in public company auditing and financial reporting, he warns that there’s a potential downside to decreasing the applicant pool:
On the other hand, service on both the Board and senior staff requires specialized expertise, and people with that expertise are likely to be highly paid already. Personal circumstances may make it difficult for some qualified individuals to accept a large pay cut despite a sincere interest in this type of public service.
The new compensation levels could make it more likely that two kinds of people will be interested in PCAOB Board and executive-level staff positions — senior professionals who are near retirement and are not financially dependent on their compensation, and more junior, less experienced individuals for whom the lower salaries are more consistent with their current pay. Ideally, however, just as salary considerations should not unduly incentivize PCAOB service, salary levels should not prevent people with the necessary specialized technical knowledge and dedication to public service from joining the PCAOB.
He also points out that the PCAOB has historically experienced low turnover among its senior staff, and that lower compensation levels may increase turnover. Dan warns that this could destabilize the staff and undermine institutional knowledge.
While the current SEC has generally taken a light touch when it comes to regulation of innovative financial products like crypto, the burgeoning prediction markets may be another matter. According to this report in Crypto.News, during his testimony last week before the Senate Banking Committee, SEC Chairman Paul Atkins warned that the agency is taking a hard look at those markets:
Atkins said the legal status of prediction markets isn’t always clear. He noted that jurisdiction overlaps between the SEC and the Commodity Futures Trading Commission (CFTC). “Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,” Atkins said.
Historically, the CFTC has been seen as the primary federal regulator for these markets. Atkins said the SEC may regulate some markets depending on how they’re structured, especially if contracts resemble securities.
“We have enough authority,” he told lawmakers, adding that a “security is a security regardless how it is and some of the nuance with prediction markets and the products depends on wording.”
The report says that SEC officials are meeting with their counterparts at the CFTC, and quotes CFTC Chair Michael Selig as saying that – where have you heard this before? – regulators’ goal is a regime that protects investors while not driving innovation offshore. Stay tuned.
Earlier this week at the Los Angeles County Bar Associations 56th Annual Securities Regulation Seminar, SEC Enforcement Director Meg Ryan delivered her first remarks since her appointment to the position back in August 2025. This speech gives us fresh insight into the SEC’s Enforcement Program and the potential areas of focus going forward.
In the speech, Judge Ryan indicated that her guiding principles as Director of the Division of Enforcement are “integrity, honor, fidelity to the law, and an unwavering commitment to the fair and judicious use of the formidable power and resources the federal government.” Acknowledging recent criticism of the Division, she noted:
Now, I am acutely aware of the criticisms of how the Division operated in the past, some of which I think are valid and warranted course correction. But I will not let the Division be weighed down by criticism that is misinformed, has been remedied, or only exists as historical artifact. Our mission – of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation – is too important.
On the topic of process, Judge Ryan discussed the importance of the Wells submission process and confirmed the four-week window that proposed defendants or respondents have to make a submission explaining why the Commission should not authorize an enforcement action. She noted that a member of the enforcement senior leadership team will attend every Wells meeting, and provided assurance that all Wells submissions will be read and carefully considered. Judge Ryan warned that deliberate circumvention of the process, including “tactical tardiness and other games,” will not be tolerated.
With regard to the Division’s priorities, Judge Ryan noted reports that “enforcement work at the SEC has been tossed to the wayside are not only greatly exaggerated but flat out wrong.” She noted that:
A principal focus of our enforcement program is thus to protect investors from the myriad fraud schemes cooked up by bad actors, which Chairman Atkins refers to as the liars, cheats, and thieves. Identifying, rooting out, and remedying scams, particularly those that inflict devastating costs on everyday retail investors, is the cornerstone of what we do. Our work will continue to focus on uncovering and deterring fraud that wipes out American investors’ retirement savings, or fraud that undercuts their progress towards saving for a home, or their kids’ education. And we will make full use of the remedies available to return money to investors harmed by those frauds.
Likewise, we will continue to charge violations of the securities laws for misconduct that clearly undermines market integrity, including accounting fraud, insider trading, wash trading, and market manipulation schemes. This critical work ensures that appropriate market forces, not bad actors, determine the value of securities.
She also addressed compliance with other provisions of our federal securities laws, including a public company’s reporting requirements and obligations to maintain adequate books and records and devise and maintain systems of internal accounting controls, or a broker-dealer or investment adviser’s obligation to adhere to its fiduciary duties and financial responsibility rules. On this front, she noted:
Are violations of these provisions on par with fraud? No, not necessarily. In fact, I am confident that many violations of these provisions should not – and do not – result in enforcement cases by the Commission. But there is a middle ground: where fraud is absent, but compliance has failed in a way that poses risks to investors, risks to the integrity of the market, or yields a benefit to the participant. It is a place that may warrant enforcement action but may also present opportunity. Opportunity for both the Division and those who might be subject to an enforcement action to craft thoughtful resolutions in an appropriate case – resolutions that recognize wrongdoing while rectifying the violation or charting a firmer path toward compliance. Because – at the end of the day – our work in this space is about ensuring participants in our capital markets are providing investors with the necessary information and operating within the guardrails that make our capital markets the envy of the world. Where other divisions can identify, educate, and help people and entities remediate the problem or deficiency, fantastic.
In conclusion, Judge Ryan noted that we do not live in a perfect world, so the Division of Enforcement is necessary to address wrongdoing and violations of the securities laws.
This week in the blog, I have been covering the back-to-back appearances of Chairman Atkins before the House Committee on Financial Services and the Senate Committee on Banking, Housing and Urban Affairs. Yesterday, Chairman Atkins appeared on the Senate side, and continued his discussion of priorities and legislative efforts on securities law matters.
Senate Banking Committee Chairman Tim Scott delivered opening remarks at the hearing, stating:
What a difference a new administration makes.
Not just time – a year – but the difference that leadership makes and we are so thankful that we have new leadership at the SEC. So welcome, Mr. Atkins.
Just over a year ago, under the Biden administration, Americans were dealing with an economy marked by instability and rising costs, fueled by an unaccountable federal government.
Families in South Carolina felt it every single time they filled up their gas tank, went to the grocery store, or tried to plan for the future.
Small businesses felt it when Washington made it harder to grow, invest, and hire.
Today, we are on a different path. Thank God.
Under President Trump, we are refocusing on growth, opportunity, and common sense.
This means clarity instead of chaos, accountability instead of bureaucracy, and a government that serves the American people, not gets in their way.
Chair Atkins, the SEC under your leadership reflects that approach.
America’s $124.3 trillion capital markets are the deepest and most liquid in the world, leading both in market capitalization and trading volume. They are a marvel of human ingenuity. Yet over the years, the federal government’s natural tendency has asserted itself, and rules have multiplied faster than the problems that they were intended to solve.
This Congress and the Trump Administration are focused on bringing down the cost of living for the American people, and the SEC has a vital role to play. For example, public companies spend $2.7 billion a year to file their annual reports. This is $2.7 billion that companies are not reinvesting in their businesses to create jobs. $2.7 billion that our disclosure regime is diverting from your constituents to corporate lawyers, accountants, and consultants.
Now, this is not to say that we want to gut corporate disclosure, which is vital. But we must modernize, rationalize, and streamline reports so that they are meaningful, understandable, and not a repellant to investors. After all, how many of you would read through an annual filing that rivals War and Peace? Disclosure documents of that length can do more to obscure than to illuminate.
As I have stated previously, regulation ideally should be smart, effective, and appropriately tailored within the confines of our statutory authority. Instead, it has made the path to public ownership narrower, costlier, and saddled with rules that can create more friction than benefit.
On the topic of crypto regulation, Chairman Atkins stated:
Of course, I also support congressional efforts to enact the CLARITY Act. Upon its passage, the Commission stands ready to implement this landmark legislation. A federal framework for crypto markets is long overdue. Under Commissioner Hester Peirce’s leadership of our Crypto Task Force, SEC staff has provided more clarity in the past year than in the prior decade, but there is no action we can take that future-proofs our rulebook more formidably than nonpartisan market structure legislation.
As Congress completes its vital work, CFTC Chairman Mike Selig and I intend to provide a bridge toward legislation. Through our now-joint Project Crypto, we will consider a token taxonomy to offer both investors and innovators a clear understanding of their regulatory obligations. We will also look to consider exemptions that would allow market participants to move and transact on-chain.
The Senate Banking Committee discussion that ensued addressed, among other topics, access to more investment opportunities for smaller investors, the SEC’s Enforcement program and proxy advisory firms.
The latest issue of The Corporate Counsel newsletter has been sent to the printer. It is also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format. The issue includes the following articles:
– Annual Season Items
– Our 2026 Conferences — October 12-13 in Orlando, FL
As we do every year, the “Annual Season Items” article provides you with the key annual season items that you should be considering now as you finalize annual reports and prepare proxy statements. On the hot topic of AI disclosure, we note in this issue:
Given this evolving disclosure risk landscape, it is critically important for companies to follow a “back to basics” approach when it comes to AI. In the absence of specific SEC guidance about what companies should be saying in their public disclosures about AI, it is now more important than ever to thoroughly review all of a company’s external and internal statements about the development, deployment and integration of AI, as well as the attendant risks. It is important that the company’s risk management practices specifically focus on the many risks associated with AI, and that identified risks be clearly disclosed to shareholders as a means for providing appropriate context for the positive disclosures about the company’s utilization or development of AI. It is also important for a company to implement disclosure controls and procedures to ensure that public disclosures and statements concerning AI are accurate, complete and consistent across communications platforms (not just in the company’s SEC filings or in earnings releases). Further, companies should take steps to identify specific substantiation for public statements about AI, while at the same time making sure that the company’s internal documents do not include information that is contrary to the public statements. While many of these steps are important disclosure controls for any public company statements, we believe that the current environment calls for special attention to public statements about AI.
Finally, companies should recognize that their public disclosures are increasingly being consumed by AI-powered analytics, which investors are leveraging to understand company performance and inform votes on proposals presented at shareholder meetings. This recognition should continue to inform how disclosures are presented and should emphasize the importance of consistency across a company’s communications platforms.
Please email info@ccrcorp.com to or call 1.800.737.1271 to subscribe to this essential resource.
If you were wandering around Capitol Hill yesterday and were in the mood for a less fiery type of Congressional hearing to visit, you might have chosen the appearance of SEC Chairman Paul Atkins before the House Committee on Financial Services. As I mentioned on Monday, Chairman Atkins has back-to-back hearings on the Hill this week, and Wednesday marked is first appearance before the House Committee on Financial Services. House Financial Services Committee Chairman French Hill opened the hearing with these remarks, in which he noted:
The SEC’s mission is clear: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. At its core, this mission is about fostering public confidence in our markets.
These are not suggestions, nor are they partisan preferences. They are statutory mandates enacted by Congress.
Unfortunately, during the Biden Administration, the SEC strayed from this mission. Instead of focusing on its core mandate, the Commission pivoted toward politicized rulemakings that stretched far beyond the bounds of its authority.
A great disappointment, former Chair Gary Gensler, we witnessed a Commission that relied on “regulation-by-enforcement” rather than transparent rulemaking.
We saw attempts to embed political and social objectives into securities regulation, all at the expense of American investors and small business owners.
The consequences of this approach speak for themselves. Coupled with crushing compliance burdens, these policies accelerated the shrinking of our public markets. Since 2021, the number of publicly listed companies dropped by over 10 percent.
Leading entrepreneurs found their capital for growth in private markets delaying opportunities for America’s individual investors, while much of cutting-edge innovation was driven offshore by regulatory uncertainty.
That’s why in December the House advanced the INVEST Act. This strongly bipartisan legislation is designed to reignite our capital markets by cutting red tape, empowering entrepreneurs and small businesses, and expanding investment opportunities for all Americans.
I want to commend Chairman Atkins for his efforts to reverse prior rulemakings that hindered capital formation and for steering the Commission back to its fundamental enforcement responsibilities.
These actions align with Committee Republicans’ commitment to foster efficient, transparent, and innovation-friendly markets that protect investors and provide regulatory clarity that markets need, particularly in emerging areas such as digital assets.
It is imperative that Congress provide a functional and durable framework for digital asset markets. We look forward to sending market structure legislation to the President’s desk.
In his prepared remarks for the hearing, Chairman Atkins stated:
Nine months ago, I returned to the SEC with a clear mandate to recommit the agency to our core mission of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation. I am grateful to work alongside dedicated public servants who have hit the ground running in pursuit of these priorities.
America’s $124.3 trillion capital markets are the deepest and most liquid in the world, leading both in market capitalization and trading volume. They are a marvel of human ingenuity. Yet over the years, the federal government’s natural tendency has asserted itself, and rules have multiplied faster than the problems that they were intended to solve.
This Congress and the Trump Administration are focused on bringing down the cost of living for the American people, and the SEC has a vital role to play. For example, public companies spend $2.7 billion a year to file their annual reports. This is $2.7 billion that companies are not reinvesting in their businesses to create jobs. $2.7 billion that our disclosure regime is diverting from your constituents to corporate lawyers, accountants, and consultants.
Now, this is not to say that we want to gut corporate disclosure, which is vital. But we must modernize, rationalize, and streamline reports so that they are meaningful, understandable, and not a repellant to investors. After all, how many of you would read through an annual filing that rivals War and Peace? Disclosure documents of that length can do more to obscure than to illuminate.
As I have stated previously, regulation ideally should be smart, effective, and appropriately tailored within the confines of our statutory authority. Instead, it has made the path to public ownership narrower, costlier, and saddled with rules that can create more friction than benefit.
For context, shortly after I left the SEC in the mid-1990s, there were more than 7,800 companies listed on the U.S. exchanges. By the time that I returned as Chairman, that figure had fallen by roughly 40 percent.
Chairman Atkins noted his support for the Senate’s Empowering Main Street in America Act and the House’s INVEST Act, both of which are geared to enhancing capital raising opportunities for companies, and the Congressional efforts to enact the CLARITY Act, which would establish a federal framework for crypto markets.
More to come in today’s Senate Committee on Banking, Housing and Urban Affairs hearing.
