Wall Street's top U.S. regulator on Wednesday signaled his support for potentially scaling back the scope and breadth of disclosure rules and compliance costs imposed on public companies, in an effort to entice more corporations to list on the stock market.
In his first major address since becoming chairman of the U.S. Securities and Exchange Commission (SEC) earlier this year, Jay Clayton laid out his regulatory philosophy for how he plans to run the agency and said the SEC staff was working to prepare proposals aimed at reforming the rules on disclosure.
In the speech, delivered at the Economic Club of New York, details about the specific regulations that he would like to adopt or amend were scant.
But his comments broadly called for efforts to scale back unnecessary corporate disclosures, reduce compliance burdens on small- and mid-sized companies, ramp up the enforcement division's focus on protecting retail investors from run-of-the-mill frauds, and taking better care to retrospectively review SEC rules to ensure they are having the desired effect.
Such efforts would be in line with steps the SEC took late last month, when it moved to allow all public companies to file paperwork confidentially for initial public offerings.
"While there are many factors that drive the decision of whether to be a public company, increased disclosure and other burdens may render alternatives for raising capital, such as the private markets, increasingly attractive to companies that only a decade ago would have been all but certain candidates for the public markets," he said.
In one case that may reflect Clayton's enforcement approach to protecting retail investors, the SEC on Wednesday charged 13 people with involvement in a Long Island, New York, scam that cajoled dozens of elderly and other investors into buying penny stocks, bilking them out of more than $10 million.
Clayton's comments are likely to be seen as welcome news to corporate lobbying groups such as the U.S. Chamber of Commerce, which has long criticized an array of SEC disclosure rules for cluttering up corporate filings with unnecessary information.
The Chamber has often sued the SEC over rules requiring disclosures that it said were not material, and has staunchly lobbied Congress to beat back other measures championed by pension funds, unions and progressive-leaning groups.
The Chamber declined to comment.