Recently, the SEC’s Office of Investor Advocate released the report it is required to file with the Committee on Banking, Housing and Urban Affairs of the U.S. Senate and the Committee on Financial Services of the House of Representatives. In the report, the Office outlines its objectives for the 2018 fiscal year.
The report notes that the Office anticipates that the SEC will continue to advance the Disclosure Effectiveness initiative and intends to contribute to the SEC’s work in this area in order to update disclosure rules.
The report also discusses what it refers to as “the phenomenon of fewer initial public offerings,” and notes that that evidences suggests that disclosure and other related burdens do not account for the downturn in IPOs. The report notes various studies that attribute the downturn to other causes. For example, the report discusses the lack of institutional demand for smaller companies and the increased dominance of institutional investor participation (over retail participation) in the markets. The report cites another study that attributes the decline to evidence that the benefits of being public have declined as significant capital has become available through private markets. The report notes that the Office intends to focus on understanding better the dynamics of the public and private markets, including the demand of institutional investors for smaller company shares.
The full report is accessible here.