Today, SIFMA president and CEO Kenneth E. Bentsen, Jr. testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs at a hearing entitled Empowering Main Street by Unlocking Access to Capital.
In his testimony, Bentsen emphasized that public and private markets play complementary roles in capital formation, but that policymakers should pursue reforms that encourage more companies to go and remain public so that businesses can access capital and Main Street investors have greater opportunities to participate in America’s economic growth.
“The United States has long benefited from having the deepest, most liquid and most dynamic capital markets in the world,” said Bentsen. “Yet the long-term decline in the number of public companies and IPOs demonstrates that policymakers cannot take the strength and vitality of our public markets for granted. Additional reforms are needed to ensure that the costs and regulatory requirements associated with accessing and remaining in the public markets are appropriately calibrated and continue to support capital formation, economic growth and investor participation.”
Bentsen noted that while the market value of U.S.-listed equities has grown dramatically over the past quarter century, the number of publicly listed companies has declined by nearly 25 percent, limiting opportunities for investors to participate in the growth of innovative American businesses.
“The JOBS Act demonstrated that thoughtful regulatory reform can expand access to the public markets while maintaining strong investor protections,” Bentsen said. “Congress and regulators now have an opportunity to build on that success by modernizing outdated requirements, reducing unnecessary burdens and strengthening incentives for companies to access the public markets.”
Bentsen outlined several legislative and regulatory reforms that would strengthen capital formation, including:
- Supporting enactment of the House-passed INVEST Act to streamline the IPO process and reduce unnecessary barriers for companies seeking to access the public markets.
- Supporting the SEC’s proposed Registered Offering Reform and Filer Status rules, which would modernize the public offering framework and reduce compliance burdens for many public companies.
- Expanding research coverage for public companies through SEC and FINRA rulemaking to improve visibility and liquidity, particularly for smaller issuers.
- Establishing parity between 401(k) and 403(b) retirement plans so that employees of educational institutions and nonprofit organizations have access to comparable investment opportunities.
- Expanding responsible access to private markets for retail investors through regulated investment vehicles.
- Modernizing fee and expense disclosure requirements for Business Development Companies to improve transparency and facilitate investment in small businesses.
- Updating securities regulations to make electronic delivery the default method for investor communications while preserving investors’ ability to receive paper documents.
Bentsen concluded by emphasizing that strengthening capital formation is about more than helping companies raise capital.
“These efforts are about ensuring that Main Street investors, retirement savers and American workers can participate in the growth of innovative companies and share in the wealth creation that has long been a hallmark of our capital markets,” Bentsen said. “SIFMA stands ready to work with Congress, the SEC and other policymakers to advance thoughtful reforms that promote capital formation, strengthen investor access to investment opportunities and maintain strong investor protections.”
Bentsen’s written testimony expands upon these views and is available here: https://www.sifma.org/advocacy/testimony/testimony-on-empowering-main-street-by-unlocking-access-to-capital
