Grow IPOs by Shrinking Disclosures, Says SEC’s Atkins

Paul Atkins, chairman of the U.S. Securities and Exchange Commission, wants to see more initial public offerings. (Kent Nishimura/Bloomberg)

Key Points

• The SEC chairman proposed easing disclosure requirements for small companies to revive initial public offerings.
• The chairman suggested raising the size threshold for full disclosure documents and extending JOBS Act accommodations.
• NYSE President Lynn Martin advocated for semiannual reporting instead of quarterly reports due to disclosure costs.

To revive America’s initial public offerings, the government should ease disclosure requirements for smaller companies, said the chairman of the U.S. Securities and Exchange Commission in a Tuesday speech at the New York Stock Exchange.

“Decades of accretive rulemakings have produced reams of paperwork that can do more to obscure than to illuminate,” said Paul Atkins, after ringing the market’s opening bell.

Executive pay disclosures are too thorough, said the SEC chairman. At a roundtable discussion earlier this year, he said that the idea of disclosing less about management compensation was well-received by corporate executives, their pay consultants, and even investors.

Atkins also said the SEC should consider raising the size threshold above which public companies must file the full disclosure documents required of the largest companies.

Accommodations already exist under the JOBS Act of 2012 that allow tiny companies to file abbreviated registration statements for their IPOs and give them more time to adopt new accounting standards. Atkins suggested that the JOBS Act “on ramp” to public markets should be extended by giving newly public small companies several years of lightened disclosure obligations.

Atkins framed his recommendations along with tributes to America’s entrepreneurial founders and noted the country’s approaching 250th anniversary. President Franklin D. Roosevelt introduced a disclosure regime with the Securities Act of 1933 to remedy the fraud and manipulation that plagued the stock market before the crash of 1929. But in the decades since, said Atkins, regulation has taken on a life of its own and become stifling.

Before Atkins’ talk, NYSE President Lynn Martin railed against the cost of public disclosure and the hassle of dealing with proxy advisors such as Institutional Shareholder Services and Glass Lewis. Instead of submitting quarterly reports, Martin suggested that public companies should have to report only semiannually.

Write to Bill Alpert at william.alpert@barrons.com