Even if armchair investors are fleeing private credit or panicking that their unlisted shares in Anthropic PBC are now invalid, the long-term trend is clear: Public markets keep losing ground to private funds. That’s one big reason for the proposals to ditch quarterly reporting demands for listed companies.
Big and small investors hate that idea — and they’re right to. But concentrating solely on the potential rule changes misses half the story: All investors — and the watchdogs who are meant to protect them — should be just as focused on getting more information from private companies and the funds that own them. The trend is toward more convergence between public and private markets and a leveling of the playing field is necessary. Fuller reporting in private markets is the only sensible policy.
The Securities and Exchange Commission, led by Paul Atkins, is pursuing a company-friendly agenda that aims to cut the costs of being a public issuer of stock or bonds and so promote investment and growth. That’s a fine goal, although the US doesn’t seem to be suffering from a lack of economic vitality — plenty of other countries are more in need of a boost on that front.
Alongside the idea of moving to a biannual reporting standard, Atkins has also proposed lessening the already low reporting requirements for private funds through Form PF, the main regulatory disclosure demands put on hedge funds and other alternative asset managers.
But while the SEC is thinking about reducing the information available to itself and others, the push to get more retail money into private markets is well underway. In the US, it seems likely that retirement funds will eventually get access to private equity and private credit. And there are already a host of platforms that offer ways to trade in the shares of hot, unlisted technology companies. Even in the UK, the London Stock Exchange Group got regulators’ green light to launch its own private securities market, Pisces, late last year.
Certainly, direct access to many of these is only available to the very wealthy or family offices (as well as institutions, of course), but the genie is out of the bottle. Ordinary people wishing to bet on unicorns or private lending can increasingly find ways to do it. This is not a world that calls for less financial reporting.
This year’s most anticipated initial public offerings, probably starting with Space Exploration Technologies Corp., aka SpaceX, and followed by Anthropic, OpenAI, or both, are likely to reveal a whole mess of ownership claims — and possible disappointments. The people who have found their way into these companies ahead of their IPOs probably weren’t particularly fussed about revenue progression, profit margins or depreciation rates. Hopes of ever higher valuations were undoubtedly the trade.
Still, with better disclosure there is no way investors would only just be learning that Anthropic believes any transactions in its shares not explicitly approved by the AI company could be deemed void.
Meanwhile in private credit, Apollo Global Management Inc. and JPMorgan Chase & Co. are working hard to get more loans trading regularly. Apollo is also pledging to start posting daily prices for all kinds of private debt, from investment-grade corporate loans to classic mid-market buyout debt and private asset-backed bonds. The goal is to support wider access for a range of investors, especially individuals, who, unlike big institutions, will always be vulnerable to sudden and unavoidable needs to turn an investment back into cash.
If the industry is successful in making private shares and debts more reliably and easily bought and sold, more people are going to trade them. Let’s say it is. And let’s say the trend for companies remaining private for longer continues, that their popularity keeps growing among all investors, and that secondary markets in their shares and loans keep developing. What are we left with?
Then we’re in a world where public and private markets converge — where issuers can get funding readily in either, because a wider range of investors are there to provide it and trade out when they like. But there’s one key difference between the two markets that remains: disclosure. Public markets will have it and private markets won’t. Maybe that promotes investment and growth, or more likely, maybe it just encourages more companies to stay or go private so they can cut corners in reporting. That would be bad news for investors, markets and the whole economy.
This switch isn’t going to happen tomorrow and plenty of other rule changes would be required for public markets to be completely decimated. But it’s clear which way we’re currently heading: Public and private are already converging in many ways. Investors, watchdogs and even companies themselves should be looking to shine more light into the dark corners rather than lowering a veil over the bits we can now see.
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