Press Releases

McHenry, Wagner Slam Chair Gensler for Ignoring the SEC’s Capital Formation Mandate

Washington, April 14, 2023 -

The Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), along with the Chairman of the Subcommittee on Capital Markets, Ann Wagner (MO-02), sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler slamming the Commission for ignoring its capital formation mission during his tenure. The lawmakers are demanding the SEC revise its rulemaking agenda by pursuing reforms that strengthen public markets, expand opportunities for underrepresented entrepreneurs, and allow small businesses to grow. 


Read the full letter here


Read key excerpts from the letter below:

“We write to express our deep concern regarding the Securities and Exchange Commission’s (‘SEC’ or ‘Commission’) inattention to capital formation issues. The Commission’s failure to promote capital formation has weakened public markets, hurt small businesses and entrepreneurs, and decreased opportunities for investors.


“As you know, capital formation is a foundational pillar of the SEC’s statutory mission. However, under your leadership, the Commission has proposed more than 50 rules, none of which directly promotes capital formation. Instead, the Commission has focused on implementing costly regulatory disclosure requirements on topics that go beyond its scope. This approach has made the U.S. capital markets less attractive to existing and potential public companies. In today’s fiercely competitive global economy, the strength of the U.S. public markets is critical to long-term national prosperity and the financial well-being of American families. Therefore, the SEC must shift its priorities towards facilitating capital formation and ensuring that American public markets remain the most attractive in the world.


“In 2012, a divided Congress united to pass the bipartisan Jumpstart Our Business Startups Act of 2012 (JOBS Act), which reduced regulatory barriers and created new opportunities in U.S. securities laws, empowering entrepreneurs and small businesses to raise funds and create jobs. Ground-breaking leaders in sectors such as healthcare and technology owe much of their successes to the JOBS Act’s provisions, which enabled them to access resources, hire employees and fund their businesses.


“However, under your tenure, the Commission has ignored the positive lessons of the JOBS Act. While the cost of entering U.S. public markets has doubled since the 1990s, the number of publicly traded companies has declined sharply. Moreover, fewer companies are opting to enter American public markets through initial public offerings (or ‘IPOs’). In 2022, IPO activity was the slowest in over three decades, with the number of IPOs falling by 78 percent and the capital raised in IPOs by 94 compared to the previous year. The decrease in public companies and slow IPO activity severely limits investment opportunities for everyday Americans, negatively impacting their savings for retirement and their children’s education. Additionally, it stifles the growth and innovation of our economy since high-growth companies must rely on public markets to raise capital to achieve their objectives.


“The Commission should revise its rulemaking agenda by pursuing smart, incremental reforms that will strengthen U.S. public markets, expand opportunities for underrepresented entrepreneurs and investors, and encourage small businesses to grow, hire more workers and go public. Failing to act on this important pillar of the SEC’s mission threatens the strength of the U.S. capital markets and jeopardizes American business’ ability to foster domestic economic activity and compete globally.”



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