Advice to the new Chairman of the SEC

Here is some useful advice to the new Chairman of the SEC:

The incoming Securities and Exchange Commission Chair Elisse Walter has a unique opportunity to implement a mandate suggested by the recent Jumpstart Our Business Startups (JOBS) Act—namely to simplify the voluminous maze of regulatory disclosure requirements that currently overwhelm the most material information about public companies.

After all, when President Obama signed the JOBS Act into law in April, he recognized that companies seeking access to capital "should not be hindered by unnecessary or overly burdensome regulations." Among other conditions, the act called for the SEC to review Regulation S-K disclosure requirements for emerging growth companies raising money from investors and determine how those rules can be updated and simplified.

In order for start-ups to raise money, they need the promise of an exit for the early investors. Back in the day, many such companies could plausibly propose to sell shares to the public. The Congress and the SEC has made that vastly more difficult, with the result that it is much more challenging for entrepreneurs to define a credible exit for their investors, and that has reduced the capital available for the new companies that would be the foundation of future prosperity.