Securities and Exchange Commission chairman Jay Clayton, a former Wall Street lawyer, wants Main Street America to partake in the financial markets.
Clayton, who gave his first public remarks as SEC chairman at the Economic Club of New York on Wednesday, outlined eight guiding principles for his model of leadership at the agency, with one of those being looking out for the interests of the Main Street investor.
“How does the SEC assess whether we are being true to our three-part mission? The answer: the long-term interests of the Main Street investor,” Clayton said. “Or, as I say when I walk the halls of the agency, how does what we propose to do affect the long-term interests of Mr. and Ms. 401(k)? Are these investors benefitting from our efforts? Do they have appropriate investment opportunities? Are they well informed? Speaking more granularly: what can the Commission do to cultivate markets where Mr. and Ms. 401(k) are able to invest in a better future?”
To carry out this mission, Clayton said the agency plans to continue to “root out fraud and shady practices” and other “sinister behaviors” in the market that target Main Street investors.
“In this regard, we are taking further steps to find and eliminate from our system pump-and-dump scammers, those who prey on retirees, and increasingly those who use new technologies to lie, cheat, and steal,” he said.
Clayton reminded the room that they should abide by the rules too.
“I know market professionals are critical to, and enhance, the operation of our markets. I also know they know the rules and principles, and I expect them to adhere to and be guided by them. Let me put it this way: you have a special place in our economy, do not take unfair advantage of it.”
Making public markets attractive
Clayton reiterated that he would like to see “every American” participate in investment opportunities and the public markets.
He noted that there’d been a 50% decline in the number of U.S.-listed public companies over the last two decades. Part of this has to do with the increased disclosure and other burdens that make private markets more attractive.
“I also want American businesses to be able to raise the money they need to grow and create jobs. As I mentioned earlier, evidence shows that a large number of companies, including many of our country’s most innovative businesses, are opting to remain privately held,” he said.
On Tuesday, Clayton met with nine different companies and heard about some of the issues that are factoring into their decision to remain private. Going off script, he said that if he could invest, he would have wanted to invest in “every one of these” companies and that he would want the American public to have the same chance.
“One message was loud and clear: private markets operate well in many sectors and, in these areas, they offer a very attractive alternative to the public markets. I believe we need to increase the attractiveness of our public capital markets, this is key, without adversely affecting the availability of capital from our private markets, which function quite well.”
Julia La Roche is a finance reporter at Yahoo Finance.