The SEC is preparing to take another big step along the road to deregulation by reducing disclosure requirements for public companies. The SEC is also attempting to lower the hurdles facing private companies wanting to go public and possibly reversing Gensler-era restrictions on Special Purpose Acquisition Companies (SPAC), according to reports in Reuters.
SEC officials are talking with Nasdaq, the NYSE and other U.S.-based exchanges about ways to lower the disclosure requirements for public companies, further limit the ability of investors to make proxy proposals and to streamline the process private companies have to follow before making an initial public offering (IPO) according to a June 25 Reuters story citing insiders briefed on the negotiations.
Representatives from Donald Trump’s Dept. of Government Efficiency (DOGE) are pushing SEC officials to accelerate the effort to reduce the regulatory burden on public companies and reduce the volume of public disclosures required of private companies, according to a Reuters story posted July 1.
DOGE is also pushing SEC officials to reduce, change or reverse rules the SEC adopted in 2024 to restrict the ability of private companies to go public using SPACS rather than IPOs, Reuters reported.
Those changes dovetail with priorities expressed by SEC chair Paul Atkins, who argued during Congressional confirmation hearings and in public appearances more recently, that SEC regulations designed to protect investors are directly to blame for the long-term decline in the number of companies going public every year in the U.S.
Republicans have argued for years that the SEC needed to make it easier for U.S. companies to raise capital and reduce the regulatory burden on public companies.
The Trump administration has drastically amped up the rhetoric and the action behind those talking points, however, in accordance with the anti-government goals laid out in Project 2025, the far-right-wing policy plan whose goal is to reduce or eliminate the ability of federal agencies to regulate U.S. companies even over the opposition of Congress and federal courts.
Opponents warn about undermining the SEC
Opponents in Congress and SEC commissioner Caroline Crenshaw have complained about massive layoffs at the SEC and other agencies, and White-House efforts to undermine the ability of federal agencies to regulate public companies which, they warn, could undermine investor confidence in U.S. investment markets.
Crenshaw, the only remaining Democratic SEC commissioner, warned this Spring that the wholesale changes the SEC has already made amount to an irresponsible game of Jenga that will weaken the stability of U.S. investment markets and make them more likely to topple under stress.
Atkins and other Republican SEC commissioners argue that the real problems facing U.S. markets stem from excessive regulation and the antipathy of some federal regulatory agencies.
Federal agencies, fueled by the Dodd-Frank act and other legislation designed to prevent a repeat of the 2008 financial crisis, have tried wrap U.S. markets in so tight a web of regulations that they discouraged private companies from going public on U.S. exchanges and rejected outright new opportunities including wildly popular cryptocurrencies.
Atkins hinted during his confirmation hearings that he would prefer that the SEC adopt an approach to regulation similar to the one it used in 2006, when Atkins last sat on the commission, before the scale of the problems that created the 2008 crisis were fully clear and the Dodd-Frank laws had not yet been passed.
Under Atkins the SEC has drastically cut headcount, announced it would abandon 14 rules proposed by the previous administration but not finalized, abandon its defense of the climate-risk disclosure rule, and reduce the barriers preventing mutual funds and ETFs from investing freely in private assets and non-’40-Act funds.
Neither the SEC nor the White House has commented directly on the Reuters stories or said explicitly that the SEC would attempt to follow the unprecedentedly aggressive deregulatory goals and policies the Trump administration had ordered even independent agencies to follow.
An SEC spokesperson told Reuters the agency is working with DOGE to find ways for the agency to cut costs. Reuters quotes a White House spokesperson who said DOGE was working with the SEC to maintain fair and orderly markets while protecting everyday investors.
