What this has to do with the parent comment? I'm asking these because I'm not sure I follow the reasoning.
Your concern is that the SEC has very strict reporting standards and regulations. These are intended to provide a fair field between all investors (accredited and non-accredited) in order for the market to function in a more efficient way. In exchange for this increased cost of regulation upfront, the transaction between investors on the company's shares have a much lower friction (and transaction costs).
Private companies have lower regulation because the assumption is that the investors willing to buy shares are open to assume higher transaction costs in terms of due diligence. Obviously, reporting the false could open the company to lawsuits, but that's also part of the potential cost for the investors.
The choice between being a public company and a private one, in the end, is a function also of this trade-off. If I understand your reasoning, you fear that the SEC forcing himself into the private market could increase the regulatory cost of all startup. Am I right?
If that is correct, my answer would be that the SEC is not imposing the full regulation but just a minimum level of accurate reporting on behalf of the investors. This is because there's an assumption that a well behaved private market is essential to make the economy more active (imagine if this level of lying was accepted, how many investors would be willing to invest?). On the other side, I see the risk of a slippery slope and having the SEC power to grow to large and kill the startup ecosystems. I don't have a clear answer for that.
[styling note, I had pulled out the statement made in the GP comment and made it italics to emphasize it, in reference to the above comment's question "what this has to do with the parent comment].
So stylism aside, you have correctly surmised my concern that the SEC is looking to move into private markets more aggressively. I think the reason for that is nuanced but having lived through the dot.com bubble and watched how the government responded to that bubble (Sarbanes Oxley anyone?) And the huge losses that are being taken by the large banks as their Unicorns died in this the Unicorn bubble, basically accredited or not investors with lots of capital get mad when they are mislead, and their anger typically results in them getting their "friends" to do something about it. We currently have an integration between banking interest and the administration that is as deep as it has ever been. So there are many contacts both official and unofficial between Wall Street and DC.
There is also the perception of the disproportionate channeling of wealth creation to a smaller number of people through private company 'trading'. Add the antics of Uber and Theranos to the mix and it provides a convenient place for the powers that be to take "logical" and "needed" steps to curb the abuses. Generally resulting in more regulation and more risk on startups.
What this has to do with the parent comment? I'm asking these because I'm not sure I follow the reasoning. Your concern is that the SEC has very strict reporting standards and regulations. These are intended to provide a fair field between all investors (accredited and non-accredited) in order for the market to function in a more efficient way. In exchange for this increased cost of regulation upfront, the transaction between investors on the company's shares have a much lower friction (and transaction costs).
Private companies have lower regulation because the assumption is that the investors willing to buy shares are open to assume higher transaction costs in terms of due diligence. Obviously, reporting the false could open the company to lawsuits, but that's also part of the potential cost for the investors.
The choice between being a public company and a private one, in the end, is a function also of this trade-off. If I understand your reasoning, you fear that the SEC forcing himself into the private market could increase the regulatory cost of all startup. Am I right?
If that is correct, my answer would be that the SEC is not imposing the full regulation but just a minimum level of accurate reporting on behalf of the investors. This is because there's an assumption that a well behaved private market is essential to make the economy more active (imagine if this level of lying was accepted, how many investors would be willing to invest?). On the other side, I see the risk of a slippery slope and having the SEC power to grow to large and kill the startup ecosystems. I don't have a clear answer for that.