Commissioner Stein Speech

Securities and Exchange Commissioner Stein, speaking on the same day as Chair Clayton, in a speech that addressed principally market structure issues also made a number of observations on the current state of the markets. Commissioner Stein framed the market changes, such as the decline in the number of IPOs, somewhat differently than the Chair. She points out that framing matters as a "tug-of-war" between investors (demanding information) and issuers (seeking access to capital) may lead to viewing regulatory choices as a tradeoff between disclosure and capital formation. Such a view might not fully take into consideration the degree to which the market as a whole rely on access to information about private and public companies for price discovery and other purposes. Commissioner Stein observed that from "2009 through 2014, investors supplied nearly $17 trillion in primary capital – providing capital directly to companies in exchange for debt or equity securities." During the same period, the amount of capital raised in the private markets outpaced the amount raised in the public market. Commissioner Stein noted that "during 2014, for every investor dollar raised in the public market, nearly $1.50 was raised in the private markets." In her remarks, the Commissioner noted that there is an abundance of private capital that companies are able to access and, in addition, many companies are choosing to be acquired instead of going public. She observed that "One impact is a reduction in the aggregate amount of information available to the entire capital marketplace. On the whole, our markets are less transparent." The complete remarks may be accessed here: https://www.sec.gov/news/speech/stein-lighting-our-capital-markets-071117.

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