When Donald Trump interviewed Jay Clayton to be his chief securities regulator in December, the then-president elect was fixated on the steep decline in U.S. initial public offerings.
During the meeting at the Mar-a-Lago club in Florida, Trump even cited statistics on the drop, which started two decades ago, said people familiar with their discussion. He was particularly concerned that more companies were choosing to sell their shares overseas, rather than on the New York Stock Exchange and the Nasdaq Stock Market.
The conversation showed Trump’s eagerness for the Securities and Exchange Commission to focus on promoting growth, after it has spent years layering tough rules on Wall Street and other industries. In Clayton, a corporate lawyer, the president has nominated an SEC chairman who should know which regulations may need loosening.
“Public markets need to be more attractive,” said David Hirschmann, president of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness. “We need a modern, effective regulatory system that enables growth.”
Regulatory Boogeyman
While there is disagreement about how much rules are stifling markets, and even why companies are choosing to stay private, regulation has long served as a boogeyman for the chamber and other corporate lobbyists. Much of their attention has focused on the Dodd-Frank Act, which set new restrictions for Wall Street after the financial crisis.
But with Trump in the White House, Republicans controlling Congress and an SEC pick who has worked on some of the biggest IPOs, business groups see a chance to go further. They want to revisit long-standing SEC policies on what corporations must disclose to investors and chip away at onerous accounting requirements imposed more than a decade ago in response to frauds at Enron and WorldCom.
A new, de-regulatory slant would mark a major shift in the SEC’s priorities. It also would rekindle a debate that went mostly quiet in the years after the 2008 financial meltdown: Is the agency’s main job to police markets and protect shareholders, or should it give more consideration to helping businesses raise capital?
Clayton may have his Senate confirmation hearing next month, and Democrats are expected to press him on how to strike the right balance.
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