Bloomberg News

SEC Group Urges Creation of Exchange for Small Companies

February 01, 2013

The U.S. Securities and Exchange Commission should urge the creation of a new stock exchange limited to small companies that have trouble raising capital in public markets, an agency panel recommended today.

The SEC Advisory Group on Small and Emerging Companies made the recommendation as its co-chairman suggested that a 2012 law intended to increase the number of initial public offerings might fail to have a big impact. The so-called Jumpstart Our Business Startups Act designed to induce more IPOs by reducing disclosure requirements and restrictions on how firms can advertise for investors.

“The JOBS Act, at least in my view, definitely did not do enough,” said Stephen M. Graham, the advisory group’s co- chairman and a partner who has represented emerging companies at Fenwick & West LLP in Seattle. “The main reason why companies don’t want to go public is liquidity in the stock,” as well as disclosure requirements.

The advisory group said the exchange should be limited to sophisticated investors, which it didn’t define, because disclosure of the smaller companies’ financial condition would be limited. The SEC isn’t required to hew to the advisory group’s recommendations.

To contact the reporter on this story: Dave Michaels in Washington at

To contact the editor responsible for this story: Maura Reynolds at

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