Welcome to SEC Roundup, a bimonthly video series by former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Choice Advocates Network.
In this episode, Harvard Law Professor Hal Scott, director of the Committee on Capital Markets Regulation, unpacks two current debates that will shape the future of U.S. public markets: ending quarterly reporting and permitting mandatory arbitration for shareholder claims.
Scott breaks down the push to give companies the option to report earnings twice a year instead of four times, explaining how the “short-termism” problem — often blamed for discouraging long-term investment — is more nuanced than it seems. Would fewer reports really reduce market volatility and pressure? Or would investors punish companies for being less transparent?
He then addresses a potentially game-changing development at the SEC: its apparent openness to allowing mandatory arbitration clauses in IPO registration statements. Historically, the SEC has rejected such provisions, but Scott explains why this shift could make U.S. capital markets more attractive — especially for foreign companies wary of class-action lawsuits. He walks through the legal and political complexities involved, including state law limitations, the Federal Arbitration Act, and the chilling effect of mass arbitration campaigns.
Scott provides critical context on why U.S. capital markets are shrinking — and what bold reforms might be needed to reverse the trend of companies avoiding or fleeing U.S. exchanges.
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