The Need for a Comprehensive Approach to Capital Markets Regulation

Abstract

With the adoption of the Jumpstart Our Business Startups Act in 2012, Congress recognized the need to spur economic growth by facilitating access to the public market. However, certain pieces of that Act seem to have created opportunities for companies to stay private longer and enhanced optionality in the decision to go public. Now, in light of private market expansion, and as the steady decline of publicly listed firms from the late 1990s peak continues, it is time for Congress and the SEC to make a comprehensive accounting of market structure and market participation. This Article contextualizes changes to the securities laws over recent years, raises key issues and concerns related to the effects of private market growth on the public market, and gives recommendations regarding how the SEC should move forward in its attempts to expand investor eligibility in the private market. In addition, it calls for the commencement of a special study to examine the structural issues and recent changes in both markets and recommend coordinated reforms to the regulatory structure. We believe that a more comprehensive regulatory approach is needed to ensure the appropriate expansion of the private market while protecting the public market and investors at large.