SEC Chair Atkins Declares War on $2.7B Red Tape, Vows ’To Make IPOs Great Again’
Regulatory chainsaws are revving on Wall Street.
The Securities and Exchange Commission is taking a sledgehammer to the rulebook. Chair Atkins just put a staggering price tag on the compliance headache choking public markets: a cool $2.7 billion annually. The mission? Slash the burden and reboot the IPO engine.
The Compliance Tax
Forget innovation—that $2.7 billion figure represents pure friction. It's the cost of lawyers, paperwork, and endless reviews that startups pay just to get a seat at the public table. Atkins argues this 'tax' has scared off a generation of companies, pushing them to stay private longer or sell out entirely.
Streamlining the On-Ramp
The plan isn't about lowering standards. It's about cutting the bureaucratic fat. Expect proposals to simplify disclosure requirements, modernize archaic communication rules, and create a clearer path from private to public. The goal is to make going public look less like a regulatory maze and more like a strategic milestone.
A New Era for Public Markets?
This push could unlock a flood of pent-up IPO demand. If the process gets cheaper, faster, and more predictable, suddenly that public listing looks attractive again. It's a direct play to compete with private capital and foreign exchanges that have been feasting on America's regulatory feast.
The finance old guard might clutch their pearls, but the message is clear: the era of complexity for its own sake is over. Whether this actually revives the IPO or just makes lawyers slightly less rich remains to be seen—after all, on Wall Street, every solution breeds a new fee.
Regulatory burden seen as deterrent to capital formation
Before Congress, Atkins stated that lengthy and bogus public disclosure documents, including annual reports, only “do more to obscure than illuminate” for investors, with many of the public disclosure documents similar in length to the famous novel War and Peace.
Atkins argues that decades of endless rules and regulations have contributed to a 40% drop in the companies on the U.S. exchange. In the 1990s, it peaked at 7,800, but now it stands at 4,700.
While the U.S. remains the largest capital market, Atkins fears that it will lose its competitive edge if changes aren’t made.
In response, Atkins has laid out a three-pillar plan to “make IPOs great again” and cut down on the red tape:
- Re-anchoring disclosures in materiality so that investment decisions can turn on economic signals rather than on regulatory noise;
- De-politicizing shareholder meetings by restoring their focus to significant corporate matters;
- Allowing public companies to have litigation alternatives to shield innovators from the frivolous and investors from the fraudulent.
IPO activity has been subdued for years
Atkins’ review has generally been received well. Not so long ago, the Securities Industry and Financial Markets Association (SIFMA) publicly backed Atkins’ efforts to ease regulatory demands on smaller firms that might consider listing on the U.S exchange.
Acting SIFMA Chair Ronald J. Kruszewski concurs with Chairman Atkins on the need for regulation reduction due to a “lackluster IPO market”.
The U.S. IPO market has dwindled over the past decade, with increased regulatory burdens, higher cost of compliance, and a volatile market taking the blame for smaller firms choosing to accept private funding rather than IPO.
The JOBS Act of 2012 was supposed to address these issues, but as times have changed, more modern legislation is needed.
The debate between those who prioritize capital formation and less regulation and those who focus on investor protection will rage on for now. It remains to be seen how Chairman Atkins’ plans will pan out, and a large part of their success will be decided by the market, as always.
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