Welcome to SEC Roundup, a bimonthly video sequence by former Securities and Change Fee senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Alternative Advocates Community.
On this episode, Harvard Regulation Professor Hal Scott, director of the Committee on Capital Markets Regulation, unpacks two present debates that may form the way forward for U.S. public markets: ending quarterly reporting and allowing obligatory arbitration for shareholder claims.
Scott breaks down the push to offer corporations the choice to report earnings twice a 12 months as an alternative of 4 occasions, explaining how the “short-termism” drawback — usually blamed for discouraging long-term funding — is extra nuanced than it appears. Would fewer studies actually cut back market volatility and stress? Or would traders punish corporations for being much less clear?
He then addresses a doubtlessly game-changing improvement on the SEC: its obvious openness to permitting obligatory arbitration clauses in IPO registration statements. Traditionally, the SEC has rejected such provisions, however Scott explains why this shift might make U.S. capital markets extra enticing — particularly for international corporations cautious of class-action lawsuits. He walks by the authorized and political complexities concerned, together with state regulation limitations, the Federal Arbitration Act, and the chilling impact of mass arbitration campaigns.
Scott offers vital context on why U.S. capital markets are shrinking — and what daring reforms could be wanted to reverse the development of corporations avoiding or fleeing U.S. exchanges.
