U.S. Public Markets Built for the 21st Century: Exploring Reforms to Make Our... (EventID=115394)

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Connect with the House Financial Services Committee Get the latest news: https://democrats-financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinanci... Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Wednesday, March 9, 2023, at 10:00 a.m. (ET) Subcommittee on Capital Markets Chair Wagner and Ranking Member Sherman will host a hearing entitled, “U.S. Public Markets Built for the 21st Century: Exploring Reforms to Make Our Public Markets Attractive for Small and Emerging Companies Raising Capital." ___________________________________ Witnesses for this one-panel hearing will be: • The Honorable Michael S. Piwowar, Executive Vice President of MI Finance, Milken Institute • Sue Washer, Former CEO of Applied Genetics Technology Corp. (AGTC) • Anna T. Pinedo, Partner and Co-Leader of Global Capital Markets, Mayer Brown • Stacey Bowers, Professor of the Practice, University of Denver Sturm College of Law ___________________________________ Overview Importance of Entering the Public Markets In a challenging global economy, the strength of our capital markets is vital to long-term economic growth. However, rising costs and increased regulatory burdens prevent small businesses from entering our public markets, depriving everyday investors of opportunities to invest in high-growth companies and hindering the United States’ ability to compete globally. The number of new businesses entering public markets through an initial registration of publicly traded securities (or IPO) with the Securities and Exchange Commission (SEC) has declined, except for a surge in 2021 driven by an increase in the number of IPOs by special purpose acquisition companies (SPACs). The U.S. has recorded several of its worst years on record for IPOs, while costs businesses incur to go public have doubled since the 1990s. According to some reports, “Investment bankers, lawyers, and auditors collectively charge millions of dollars to prepare the lengthy registration statement that must be filed with the SEC before shares can be sold.” While IPOs in U.S. markets approach their lowest point on record, the number of annual IPOs in Mainland China continues to increase. In 2022, Mainland China accounted for 39 percent of all global IPO activity. The launch of the Beijing Stock Exchange in 2021 and tighter regulatory restrictions on Chinese issuers on U.S. exchanges have contributed to this growth. Additionally, Beijing’s “Made in China 2025” agenda lays out its plan to dominate the high-tech, biotech, and artificial intelligence industries within the next ten years.7 This increased pressure from foreign markets, especially Mainland China, only heightens the necessity for immediate action and reform. Nearly eleven years ago, a divided Congress passed the Jumpstart Our Business Startups Act, or JOBS Act of 2012, to facilitate capital formation for small companies and entrepreneurs. The JOBS Act included several provisions specifically designed to strengthen public markets. Most notably, to encourage more small-cap IPOs, Title I created a new “Emerging Growth Company” (EGC) designation and an IPO “on ramp” for companies to gradually begin complying with public company regulatory requirements. Additionally, Title V raises the thresholds for mandatory registration as a public company to prevent private companies from being forced to go public before they are ready. Congress should build on the success of these provisions by introducing smart, incremental reforms that encourage companies to go public. With more companies entering our public markets, everyday investors will have greater access to investment opportunities. Legislative Proposals H.R. [____], the “Improving Disclosure for Investors Act of 2023”. This bill directs the SEC to promulgate rules permitting financial firms to electronically deliver certain disclosures to investors. H.R. [____], the “Helping Startups Continue to Grow Act”. This bill allows certain issuers of securities regulated as emerging growth companies to continue operating under such regulations, including those related to reduced disclosures and other exemptions, for an additional five years. It also raises the maximum thresholds for companies to qualify as emerging growth companies to not more than $2 billion. H.R. [____], to reduce the required aggregate market value of voting and non-voting common equity shares for an issuer of securities to qualify as a well-known seasoned issuer. A well-known seasoned issuer is allowed to make expedited public offerings of securities through automatic shelf registrations. H.R. [____], the “Encouraging Public Offerings Act”. The bill allows issuers of securities to communicate with potential investors to ascertain interest in a contemplated securities offering, either before or after the filing.... Hearing page: https://democrats-financialservices.house.gov/events/eventsingle.aspx?EventID=410194