SEC’s Clayton mulls allowing mom-and-pop investors to play VC with pre-IPOs

Many high-valuation startups like Airbnb and Uber are often the exclusive domain of venture capitalists rather than being accessible to rank-and-file investors on the public markets

Reuters

SEC Chairman Jay Clayton testifies at a Senate Banking Committee hearing last September.

The Securities and Exchange Commission wants to make it easier for individuals to invest in private companies, including some of the world’s hottest startups, the agency’s chairman said in an interview.

SEC Chairman Jay Clayton, a Trump appointee wrestling with how to boost flagging interest in public markets, said the commission also wants to take steps to give more individual investors a shot at companies that have been out of their reach because they haven’t gone public.

Companies including Uber Technologies Inc. and Airbnb Inc. have shunned the public markets in favor of private investors such as venture capitalists. For decades, regulators have typically walled off most private deals from smaller investors, who must meet stringent income and net-worth requirements to participate because of the added risk private investing holds.

Clayton said the SEC is now weighing a major overhaul of rules intended to protect mom-and-pop investors, with the goal of opening up new options for them.

“The private markets are awash in capital these days,” Clayton said Wednesday in Nashville, where he spoke to groups of entrepreneurs and business-school students. “The question is, ho is participating?”

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