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Committee on Capital Market Regulation – Interim Report

Committee on Capital Market Regulation – Interim Report

by Toby Lucich on December 7, 2006

The Committee on Capital Market Regulation released their interim report earlier this week (Dec 5, 2006).

A couple of interesting data points noted in the study summary:

  • 5% of the value of global initial public offerings was raised in the U.S. last year, compared to 50% in 2000.
  • The U.S. share of total equity capital raised in the world’s 10 top countries has declined to 27.9% so far this year from 41% in 1995.
  • The decrease in U.S. listing premiums erodes the traditional edge maintained by the U.S. on cheaper cost of capital.
  • Private equity firms, almost non-existent in 1980, sponsored more than $200 billion of capital commitments last year alone.
  • Since 2003, private equity fundraising in the U.S. has even exceeded net cash flows into mutual funds and going private transactions have accounted for more than a quarter of publicly announced takeovers. The increased use of private markets disadvantages the average investor, who typically cannot participate in such markets.
  • The dramatic increase in the use of private U.S. markets is important evidence that regulation and litigation are keeping them out of the public market.

Bottom line – changes in implementation, not recision of the SOX 404 requirements.

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