Any stock investor, especially those who have been investing over the last twenty years, has noticed that there is a dearth publicly traded companies these days. Years of mergers and acquisitions, combined with a lack of IPOs, means there are many less publicly traded companies these days. Now, in what seems a strong move to change that, the SEC is considering making a new rule that would bar shareholders from suing companies, with all claims moving to arbitration instead. Doing so would eliminate one of the headaches of going public for companies, and would move the relationship between shareholders and companies to something more akin to clients and advisors, where arbitration is the norm.
FINSUM: This is an interesting move, but we do not think it is enough to push companies over the edge to IPO. It might also prove poor from a corporate governance perspective.