Jay Clayton is Chairman of the U.S. Securities and Exchange Commission. This post is based on Chairman Clayton’s recent public statement. The views expressed in this post are those of Mr. Clayton and do not necessarily reflect those of the Securities and Exchange Commission or its staff.
Today, the Commission proposed amendments that would harmonize, simplify and improve the framework for private offerings under the Securities Act of 1933. Today’s proposals would rationalize an overly complex, patchwork regulatory framework and thereby promote capital formation while preserving or enhancing important investor protections. The proposals, which reflect a comprehensive retrospective review, are a continuation of our ongoing efforts to modernize our key rule sets.
Our markets are far different today than they were 35 or more years ago. Then, our private capital markets were a minor component of our economy for both companies and investors. Today, in terms of the amount of capital raised, investment opportunities, returns and other key metrics, our private capital markets often are seen as more attractive for large, seasoned companies and professional investors than our public markets. These companies and investors have the resources, expertise and experience to navigate complex rule sets. Today’s proposals are centered on small and medium-sized companies. These companies contribute substantially to our economy but are unlikely to become public companies due to their size, the nature of their capital needs, or other factors. For them, private offerings are a key source of capital to continue to grow and create jobs. However, they generally do not have the sophistication to effectively navigate complex rule sets. Congress and the Commission have long recognized this dependence on our private markets and have significantly expanded the private offering framework over many years. These efforts have created more avenues for capital formation but have not reduced complexity.
