Washington, D.C. — Today, the Securities and Exchange Commission (SEC) voted 3-2 to approve rules that will make it easier for companies to sell their shares to individual investors without having to abide by the disclosures that come from being a public company. In response, Andy Green, managing director of Economic Policy at the Center for American Progress, issued the following statement:
These new rules take a sledgehammer to investor protection by making it easier to peddle very risky and potentially fraudulent investments to hardworking families saving for college and retirement. By removing incentives for public offerings, many companies may remain in the private, nonpublic market, where information and rights available to investors—and regulators—will be scarce. Problems will go undetected, and investors will be unable to effectively allocate capital or protect themselves against fraud. Make no mistake, the SEC’s latest step will hurt investors.
The SEC has also landed a major slap in the face on the millions of investors who are demanding more disclosure on issues ranging from climate risk and workers’ rights to corporate governance. Rebuilding a social contract in America demands better long-term alignment among companies, investors, and society. Corporations and executives work better when they know they will be held accountable for their actions. Ultimately, gutting the public markets system undermines the efficiency of capital allocation that the U.S. economy depends upon. Instead of this deregulatory agenda, the SEC should be driving a vision for a transparent, sustainable, and pro-investor protection approach across the board, with competitive public markets at the center.
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