WASHINGTON (Reuters) - The new U.S. Securities and Exchange Commission chairman wants to reverse the steep decline in initial public offerings and give individual investors more access to smaller, successful companies, according to a speech he is scheduled to deliver on Thursday.
Chairman Jay Clayton, confirmed six weeks ago, wants to look into why fewer companies are going public, according to his prepared remarks to an industry board which advises the agency on investors. The regular meeting will also cover legislation to overhaul post-financial crisis regulatory reforms, which has passed the House of Representatives and languished in the Senate.
Last year IPOs in the United States fell by more than a third from 2015, and many of those 102 share offerings ended up trading below their debut price.
IPOs had been held back by uncertainty about the outcome of the U.S. presidential election and the Federal Reserve’s expected interest rate hikes this year. But regulation and the threat of litigation also discourage companies from going public because that would require increased disclosures and invite greater SEC scrutiny.
When companies stay private, they put possibly winning investments out of reach for smaller, individual investors, according to Clayton.
“High quality companies may choose to go public at a later stage, after much of their early growth has already been achieved. Other companies may choose to stay private,” according to the speech.
“This ultimately results in fewer opportunities for Main Street Americans to share in our economy’s growth, at a time when we are asking them to do more on their own to save and invest for their future and their children’s futures.”
SEC staff is exploring ways to make going public more attractive while protecting investors, according to Clayton.
One member of the advisory board, former congressional staffer Hester Peirce, may be able to carry out Clayton’s ideas in the near future, as she is rumored to be President Donald Trump’s pick for the commission’s open Republican seat.
Reporting by Lisa Lambert; Editing by Richard Chang