Gensler says SEC weighs new rules, more disclosure from private capital funds
U.S. Securities and Exchange Commission Chair Gary Gensler speaks before a Senate Banking, Housing and Urban Affairs Committee oversight committee on the SEC at Capitol Hill, Washington, September 14th, 2021.
Evelyn Hockstein | Pool | Reuters
Securities and Exchange Commission Chairman Gary GenslerWall Street’s top regulator said Monday that he is working to create rules that encourage transparency and greater competition between the largest companies in the country and those that finance them.
Gensler, who spoke with CNBC’s “Squawk Box,” said he wants to ensure large private companies and private equity firms — many of which count public pension funds among their investors — are disclosing enough information to stakeholders.
“We have had public and private companies for many years. “We’ve always said: If you want to tap into a broad public [for capital]Gensler stated that there is a simple bargain. Share information and disclose any information that might be important for that investor.”
He said, “We will take up again a project to drive greater competition and efficiency within the private funds sector.” “These are the funds that raise money — the total number is about $17 trillion — raise money from pension funds and also from wealthy individuals.”
It is possible for young start-ups and companies to resist any effort to demand more operational and financial disclosures from private corporations.
Venture capital funds and private equity firms often provide funding to young businesses looking for production facilities and products that can be launched on a global or national level.
Prior to the advent of public capital, private capital couldn’t fund companies as well as public markets. To encourage innovation, regulators provided greater control over younger companies’ business data. As these businesses matured they might eventually tap the public markets to disclose financial details such as revenues, earnings and pay.
Private funds manage approximately $17 trillion. Many companies delay their entry into public markets. Sometimes, they use an initial public offer to allow its most wealthy investors to get out.
CNBC did not reach out to the SEC representatives for further information on their plan.