SEC Seeks to Rev Up ‘Engine of Growth’ by Loosening Corporate Disclosure Rules

Ripping up the red tape around public market debuts could lead to more ribbon-cutting ceremonies for startups.

Or at least that’s the hope of the Securities and Exchange Commission, which is reportedly in talks with major stock exchanges to ease disclosure rules for public companies and spur initial public offerings. The agency is interested in “an overhaul of current proxy processes” that would, among other things, ease disclosure requirements, Reuters reported last week. Exchange listing fees and special purpose acquisition companies (SPACs) were also a part of the months-long discussions between the regulator and exchanges.

Friendlier Cop on the Beat

SEC Chair Paul Atkins’s stance on financial regulation contrasts starkly with that of his predecessor, Gary Gensler.

“As the chairman has said, capital formation is at the root of what we do — fostering a direct, economical route for investors’ capital to find its way to entrepreneurs and industry to create products and services. The SEC is focused on this engine of growth,” an SEC spokesperson said in response to The Daily Upside’s emailed query.

Gensler was focused on enhancing US capital markets as well, but took an aggressively cautious turn as speculative trading in crypto, meme stocks and SPACs, or blank-check companies, reached a fever pitch. He rolled out dozens of rules to bolster investor protection, which some blamed for a steep decline in IPO activity in 2022, when the pace of public debuts was the slowest in over three decades. The SEC’s crackdown on crypto, which included aggressive use of enforcement action, earned Gensler the title of industry public enemy No. 1.

Under Gensler’s leadership, the SEC enacted rules on climate risk disclosure, cybersecurity incident reporting and proxy voting. According to an October 2024 report from the Committee on Capital Markets Regulation, which compared the pace of SEC rulemaking under different leaders:

• Gensler enacted 34 rules, exceeding three of his most recent predecessors by an average of 36%. He oversaw the issuance of 49 proposed and final substantive rulemakings, which topped only the 67 issued by Mary Schapiro among the past three agency chairs.
• However, Schapiro operated under a congressional mandate for more than half of her total rules, whereas Gensler’s rules were mostly voluntary, with nine of those, or roughly 18%, resulting from a directive.

While IPO activity is still down, newly listed companies have been performing well. 

Winds of Change: Easing regulation could help put the wind back in the US equity market’s sails, but market volatility threatens to counteract it. “Although macro crosscurrents like trade policy and recessionary fears could continue to challenge the markets, the potential for a solid IPO rebound remains if markets can digest them,” EY Americas IPO and SPAC advisory leader Mark Schwartz wrote in a report published in April.