SEC announces new rules to "make IPOs great again"
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President Trump motions to SEC chairman Paul Atkins during Atkins' swearing-in ceremony in the Oval Office at the White House last year. Photo: Chip Somodevilla/Getty Images
The Securities and Exchange Commission on Tuesday proposed two new rules that the agency says will make it easier for companies to go public.
Why it matters: It's the largest overhaul of the IPO rules in 20 years, the agency says, and part of SEC chairman Paul Atkins' push to "make IPOs great again."
The big picture: Fewer companies go public than they did in the 1990s. And in more recent years, the biggest and sexiest startups have typically preferred to stay private for longer.
Follow the money: There are a lot of reasons for the decline.
- For starters, there's now a lot more private capital available from venture investors, private equity firms and others — so companies can raise hundreds of millions of dollars without the hassle of public filing requirements and more regulations.
Zoom in: The rule changes proposed Tuesday are fairly wonky, but in broad strokes they would:
- Make it easier for small companies to conduct "shelf offerings," helping them to raise money, among other changes. This would be "the most significant modernization of the registered offering framework in more than 20 years," the agency said in a statement.
- Relax disclosure requirements for smaller companies — and give larger firms at least a five-year on-ramp before having to adhere to stricter disclosure rules.
Between the lines: That change could be a boon for Elon Musk's SpaceX, which is expected to begin trading as a newly public company as soon as next month, as well as anticipated mega IPOs from AI companies Anthropic and OpenAI.
Catch up quick: SEC chair Paul Atkins argues that too many rules and regulations scare companies away from going public.
- Earlier this year, the SEC proposed getting rid of quarterly financial reporting in favor of semi-annual disclosures.
What they're saying: The goal is "making America attractive again to invest in," Atkins said earlier this month at the Milken Institute Global Conference in Beverly Hills, California.
- "To make basically IPOs great again."
- He mentioned reducing the cost and complexity of public disclosures, reducing "frivolous litigation" and moving away from shareholder proposals from "special interest groups with an ax to grind."
By the numbers: In congressional testimony earlier this year, Atkins noted that in the early 1990s, when he worked at the SEC as a staffer, more than 7,800 companies listed on the U.S. exchanges.
- Last year there were 374 IPOs — very roughly in line with a typical year over the past quarter-century.
Reality check: In 2021, there was a huge surge in companies going public — more than 1,000 filed, during a pandemic-era boom time for investing and markets.
💬 Thought bubble from Axios Pro Rata's Dan Primack: Meh.
- If they really want to get more companies public, revive the 500 shareholder rule and become granular about it.
- That rule that required companies with 500 or more shareholders to register with the SEC, and effectively go public. But the threshold was raised to 2,000 in 2012.
The bottom line: There are two ways to encourage more IPOs. You can tighten the rules and make it harder to stay private. Or you can try easing up and luring companies back. President Trump's SEC is taking the latter road.
