SEC Chair Summarizes Recent Efforts to Promote Capital Formation

In a speech at the Nashville 36|86 Entrepreneurship Festival, SEC Chair Jay Clayton outlined recent agency efforts to encourage capital formation for public companies and companies that are considering going public.

Mr. Clayton highlighted three specific categories of SEC actions: (i) a scaled disclosure framework for smaller companies (including adjusting the thresholds for companies deemed to be “smaller reporting companies” and eligible to provide more limited “scaled disclosures”), (ii) disclosure modernization and simplification (i.e., revising GAAP and S-K disclosure requirements to minimize duplication) and (iii) staff guidance to facilitate the initial public offering (“IPO”) process.

Mr. Clayton suggested that the SEC undertake a review of the current framework for exempt offerings. In particular, he stated that the SEC should:

  • examine the “complexity” of the current exemption framework for issuers and investors, and decide on changes to streamline it;
  • consider whether rules regarding who can invest in certain offerings should be expanded to focus on criteria such as the sophistication of the investor and the specific amount of the investment; and
  • permit issuers to transition more readily from one exemption to another, or to a public offering.

Mr. Clayton also discussed the SEC’s approach to distributed ledger technology, digital assets and initial coin offerings. He asserted that efforts in those particular areas reflect the two abiding principles of the SEC: (i) embrace new technologies that reduce costs while also offering new investment opportunities and (ii) require that retail investors have access to necessary information to make sound investment decisions.

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