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.

– Dave Lynn