The global threat to US securities laws

Cite this Article
Larry Ribstein, The global threat to US securities laws, Truth on the Market (May 26, 2011),

Today’s WSJ reports on the US’s slide in stock listings, which explains the NYSE/Deutsche Borse move.  It notes that

  • U.S. stock listings are down by 43%, or by 3800, since 1997.
  • Listings outside the U.S. have doubled.  
  • U.S. IPOs since 2000 are down 71% from the 1990s. 
  • IPOs by VC-backed startups are down from 90% in the 1980s to 15%.

Some reasons:  firms have lower compliance costs, fewer shareholder suits, lower d & o insurance costs, and lower listing fees, no SOX (or Dodd-Frank).

Nasdaq is seeking to compete with London’s AIM by opening an exchange for small companies that don’t meet its general listing requirements.

But this won’t solve the problem.  In the long run, the US securities laws compete in a global market.  Although other factors, including the growth of foreign markets, help explain the above shifts, these other factors increase the competitive pressure on US law.  Congress and the SEC are going to have to stop acting like they’re alone in the world.