WASHINGTON (AP) — The Securities and Exchange Commission is open to easing rules for private companies that issue stock, the agency’s chairman said Tuesday. But it must first weigh the benefits of those changes against a potential rise in fraudulent stock offerings.
Private companies can keep their finances secret if they have fewer than 500 shareholders. SEC Chairman Mary Schapiro said the agency is trying to see if it makes sense to raise that threshold.
A change would make it easier for Facebook, Twitter and others to raise money without meeting the reporting requirements for public companies.
Schapiro said she’s sympathetic to businesses’ complaint that the current limit restricts their ability to raise capital. But she and her staff said looser requirements could also lead to more cases of phony companies scamming investors.
The most important goal is “getting this balance right between protecting investors and making access to capital affordable and efficient,” Schapiro told the panel.
Some lawmakers say the current rules discourage investment and limit economic growth.
“Efficiently raising capital to the best investment opportunities in the U.S. is critical to a widespread economic recovery and the long-term viability of our global market position,” said Rep. Darrell Issa, R-El Cajon, chairman of the House Oversight and Government Reform Committee.
