Securities Disclosure Reform

Abstract

The adverse impact of the current securities disclosure regime on small entrepreneurial and start-up firms, as well as on innovation, job creation, and economic growth is substantial. Moreover, disclosure requirements have become so voluminous that they obfuscate rather than inform. This paper outlines a program of interim reforms to improve the existing disclosure regime. It recommends specific changes to Regulation A, crowdfunding, Regulation D, and the regulation of small public companies and of secondary markets to improve the current regulatory environment. This paper also outlines a program of fundamental reform that would dramatically simplify the existing disclosure regime to the benefit of both investors and issuers. This proposal would replace the current 14 disclosure categories with three disclosure regimes—public, quasi-public, and private—and disclosure under the first two categories would be scaled based on either public float or the number of beneficial shareholders.