Center for American Progress

CAP Testimony Before the SEC’s Investor Advisory Committee on Exemptions From Securities Laws

CAP Testimony Before the SEC’s Investor Advisory Committee on Exemptions From Securities Laws

CAP’s Alexandra Thornton provided testimony to the SEC’s Investor Advisory Committee about the potential harm to investors and the economy of expanding exemptions from public disclosure requirements for private securities offerings.

On September 21, 2023, Center for American Progress Senior Director of Financial Regulation Alexandra Thornton testified before the U.S. Securities and Exchange Commission’s (SEC) Investor Advisory Committee as part of a discussion regarding securities offerings that are exempt from the SEC’s public disclosure rules. During the panel, the committee focused on Regulation D, Rule 506, which is the most widely used exemption and the primary way private companies and funds raise capital. As explained in CAP’s report on exemptions from public disclosure, today, more capital is raised through these exemptions than in registered public company offerings, exposing nearly all retirement savers and other investors to the hidden risks of the private markets.

Thornton’s written statement and oral testimony expressed deep concern that Regulation D and other exemptions from the public disclosure framework are undermining the basic bargain of the securities laws: that companies seeking to sell securities to the public must first provide the public with the information they need to make sound investment decisions. Yet the availability and use of exemptions is expanding dramatically, such that nearly all retirement savers and other investors are exposed to the hidden risks of private markets. In addition, hundreds of private companies have reached billion-dollar-plus valuations, employing thousands of workers, and selling products and services to millions of people, without being required to make basic disclosures about their operations, financials, and risks.

Click here to read the author’s testimony.

Click here to view the panel agenda and here to view the webcast of the panel discussion.

Read CAP’s report on exemptions from public disclosure

Read the executive summary of the report

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Alexandra Thornton

Senior Director, Financial Regulation


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