October 5, 2011

SEC Reforms are Big Wins for Capital Markets

J. W. Verret

Senior Affiliated Scholar

The three changes to the SEC recently endorsed by the House represent much needed reforms to our capital markets system. 

Congress has been seeking to cut back old undergrowth in the securities laws to promote job growth. Today, the House has swung for the fences and it hit a triple with these three bills. 

The investor thresholds and solicitation limits that these bills will amend were designed for a different time and a different market. Financial markets in London, Tokyo, and Hong Kong learned long ago that specialized capital markets for small, high growth businesses are a vital incubator for investor wealth. 

The US is far behind international markets in number of small company IPOs, but these three bills promise to help us catch up. 

The existing investor thresholds for company registration was not even updated for inflation, nor did it take into account the myriad of resources investors now have at their fingertips to get information about the value of unregistered securities.