SEC Chair Atkins told Congress public companies spend $2.7B annually on compliance filings. His plan: cut the red tape, revive the IPO market.
Why IPOs Disappeared — And How the SEC Plans To Fix It
Paul Atkins doesn't mince words. In his testimony before the House Financial Services Committee on February 11, 2026, the SEC Chair described the current regulatory framework for public companies as a system where spending on compliance has crowded out spending on growth, innovation, and hiring. The price tag? Approximately $2.7 billion annually, just for public companies to prepare and file the required disclosures with the SEC.
That figure doesn't include enforcement costs, legal defense, or ongoing operational compliance. It's purely the cost of producing the paperwork the agency demands — primarily annual reports, quarterly filings, and proxy statements. Atkins compared many of these documents to the length of Leo Tolstoy's War and Peace, arguing they "do more to obscure than illuminate" for investors. The irony, he suggested, is that all this mandated disclosure might not actually be helping the people it's supposed to protect.
The structural consequence of this burden is visible in the data. When Atkins left the SEC in the mid-1990s, there were more than 7,800 companies listed on U.S. exchanges. By September 2025, that number had fallen to 4,761 — a decline of roughly 40%. This isn't consolidation or natural market evolution. It's regulatory deterrence. Companies are staying private longer, seeking listings on foreign exchanges, or avoiding public markets entirely because the cost-benefit calculation no longer makes sense for smaller or mid-sized firms.
Atkins framed this decline as a failure of the SEC's third mandate: facilitating capital formation. The agency's three-part mission — protecting investors, maintaining fair and efficient markets, and facilitating capital formation — has become imbalanced, he argued, with the first two priorities suffocating the third. His plan to correct this is built on three pillars.
First, re-anchor disclosures in financial materiality. Under this framework, companies would be required to disclose information that genuinely affects investment decisions — revenue, risk factors, governance structures — but not information driven by political or social mandates unrelated to economic performance. This directly targets recent expansions of disclosure requirements around climate, diversity, and social issues, which Atkins views as "regulatory noise" rather than investor-relevant signals.
Second, de-politicize shareholder meetings. Atkins wants to restore their focus to core corporate matters — board elections, executive compensation, major transactions — and reduce the use of shareholder proposals as vehicles for activism unrelated to business performance. This pillar is aimed at preventing proxy season from becoming a battleground for social agendas that distract from fiduciary obligations.
Third, allow litigation alternatives. Securities litigation in the U.S. is notoriously expensive and adversarial, with class-action lawsuits often filed immediately after any stock price decline regardless of whether fraud occurred. Atkins is proposing mechanisms that would give companies alternatives to defend themselves against frivolous claims while preserving genuine investor protections against fraud. The goal is to "shield innovators from the frivolous and investors from the fraudulent," as he put it in his testimony.
The broader agenda extends beyond traditional public companies. Atkins confirmed that the SEC is preparing an "innovation exemption" for crypto firms, expected to be released within a month. This exemption would grant temporary regulatory relief, allowing digital asset projects to launch on-chain products without immediately facing the full weight of securities-law disclosure and compliance burdens. It's a direct reversal of the "regulation by enforcement" approach that defined the Biden-era SEC under Gary Gensler, where crypto projects were left in legal limbo until the agency brought enforcement actions.
Whether this agenda succeeds depends on several variables. Congress would need to back the reforms, particularly the disclosure simplification and litigation reform components. Industry groups like SIFMA have already voiced support, citing a "lackluster IPO market" as justification for easing regulatory demands on smaller firms. But investor advocates are likely to push back, arguing that reducing disclosure requirements could erode transparency and increase risk for retail participants.
The other wildcard is how "materiality" gets redefined in practice. If it becomes a mechanism to genuinely streamline disclosures to economically relevant information, it could work. If it becomes a tool to avoid accountability on issues investors care about — governance failures, risk management breakdowns, environmental liabilities — it could backfire badly. Atkins is betting that the market will sort this out: that companies will provide the disclosures investors actually want to see, and that regulatory mandates are what's driving the bloat, not investor demand.
The crypto exemption, meanwhile, is being closely watched. If it provides real clarity and reduces legal uncertainty without compromising investor protection, it could unlock significant capital formation in digital assets. If it's too vague or creates loopholes that bad actors exploit, it'll reinforce the case for stricter oversight.
For now, Atkins has signaled a clear direction: simplification, scalability, and a return to the SEC's core mission. Whether that revives the IPO market or just shifts risk from companies to investors remains to be seen.