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The obvious but unpopular solution would be to make it easier for companies to go public. The trade off is that Theranos would be public, but so would, for exa

The obvious but unpopular solution would be to make it easier for companies to go public. The trade off is that Theranos would be public, but so would, for example, Stripe and Slack.

deleted 8y ago
[deleted]
angersock 8y ago
Sarbox screwed up perhaps more than it helped.
- dstroot 8y ago
  Yes - we punished 1,000’s of good honest companies for the deliberate misdeeds of a few bad apples. Terrible policy.
  - pcwalton 8y ago
    Those "few bad apples" caused the worst global recession since the Depression. Let's not minimize the circumstances that led to Sarbox. Edit: This is wrong, see below.
    - rpedela 8y ago
      I thought SOX came out of Enron and WorldCom which didn't have much to do with the 2008 recession?
    - antidesitter 8y ago
      Sarbox was enacted in 2002.
    - tomjakubowski 8y ago
      The 2007-2008 financial crisis led to Dodd-Frank, which is much more concerned with banking practices than public investment.
  - Frondo 8y ago
    Regulation isn't punishment.
- hermanradtke 8y ago
  SOX proves there are adults running the business. There are some bad parts of SOX, but most of it is good. Also, companies can define their own policies and standards under SOX, unlike say PCI where you must adhere to an industry standard. This means companies that are run well can make decisions about doing a user access review yearly instead of quarterly.
dalbasal 8y ago
We have large "private" markets today, the sectors financing companies outside of public markets. This is less regulated, and a lot less transparent. I agree with you that there are trade-offs. On one hand, making it harder for companies to go public creates a more QA-ed public market and prevents some very questionable fundraising. OTOH, the stricter criteria & controls exclude smaller companies from public markets altogether, either because they don't qualify or don't want the extra hassle, transparency or outside scrutiny. Public markets are more transparent and more open to the "retail investor." So, there are real reasons to worry about trends towards staying private. However.... I don't think this is all or mostly about securities regulators or policy. First, wealth is increasingly concentrated. "Retail" investors are not as important a source of finance. Where they do need access (pensions, etc.), this can be had 2nd hand via the complex "corporate structuring" of most large piles of aggregated wealth. Basically, the problem that public markets centralize and solve is proportionally smaller in this generation than the last. If public markets didn't exist today, "private" alternatives could probably fill most of the void comfortably. I do think it's time for fresh ideas. I would not object to a more active regulator, but in different ways, than we've seen up to now. How about regulators inventing new types of securities, instead of leaving this to the shadow sector.
dd36 8y ago
Pink sheets.
rdlecler1 8y ago
Theranos wouldn’t have been public because it would have had to undergo much more scrutiny and if it did get to the public markets (not the pink sheets) smart investors would have shorted the hell out of it. The fundamental problem was that blood is too heterogeneous at the sample size they were drawing from for many (most?) of their tests. There’s lots of scientific literature out there. 60 minutes figuring out the right question to ask and then another 60 minutes googling would have been sufficient due diligence to pass on this investment. For the most part Theranos was not made up of sophisticated investors and any professional money that came in late should be fired.
everdev 8y ago
Or, the ability to invest in and profit from private companies.
leksak 8y ago
What about deincentivizing mega-companies and instead putting into law that there is a maximum size a corporation can be and if exceeded demands it to be split into two or more companies?

The obvious but unpopular solution would be to make it easier for companies to go public. The trade off is that Theranos would be public, but so would, for example, Stripe and Slack.

deleted 8y ago

[deleted]

angersock 8y ago

Sarbox screwed up perhaps more than it helped.

dstroot 8y ago
Yes - we punished 1,000’s of good honest companies for the deliberate misdeeds of a few bad apples. Terrible policy.
- pcwalton 8y ago
  Those "few bad apples" caused the worst global recession since the Depression. Let's not minimize the circumstances that led to Sarbox. Edit: This is wrong, see below.
  - rpedela 8y ago
    I thought SOX came out of Enron and WorldCom which didn't have much to do with the 2008 recession?
  - antidesitter 8y ago
    Sarbox was enacted in 2002.
  - tomjakubowski 8y ago
    The 2007-2008 financial crisis led to Dodd-Frank, which is much more concerned with banking practices than public investment.
- Frondo 8y ago
  Regulation isn't punishment.
hermanradtke 8y ago
SOX proves there are adults running the business. There are some bad parts of SOX, but most of it is good. Also, companies can define their own policies and standards under SOX, unlike say PCI where you must adhere to an industry standard. This means companies that are run well can make decisions about doing a user access review yearly instead of quarterly.

dalbasal 8y ago

We have large "private" markets today, the sectors financing companies outside of public markets. This is less regulated, and a lot less transparent. I agree with you that there are trade-offs. On one hand, making it harder for companies to go public creates a more QA-ed public market and prevents some very questionable fundraising. OTOH, the stricter criteria & controls exclude smaller companies from public markets altogether, either because they don't qualify or don't want the extra hassle, transparency or outside scrutiny. Public markets are more transparent and more open to the "retail investor." So, there are real reasons to worry about trends towards staying private. However.... I don't think this is all or mostly about securities regulators or policy. First, wealth is increasingly concentrated. "Retail" investors are not as important a source of finance. Where they do need access (pensions, etc.), this can be had 2nd hand via the complex "corporate structuring" of most large piles of aggregated wealth. Basically, the problem that public markets centralize and solve is proportionally smaller in this generation than the last. If public markets didn't exist today, "private" alternatives could probably fill most of the void comfortably. I do think it's time for fresh ideas. I would not object to a more active regulator, but in different ways, than we've seen up to now. How about regulators inventing new types of securities, instead of leaving this to the shadow sector.

dd36 8y ago

Pink sheets.

rdlecler1 8y ago

Theranos wouldn’t have been public because it would have had to undergo much more scrutiny and if it did get to the public markets (not the pink sheets) smart investors would have shorted the hell out of it. The fundamental problem was that blood is too heterogeneous at the sample size they were drawing from for many (most?) of their tests. There’s lots of scientific literature out there. 60 minutes figuring out the right question to ask and then another 60 minutes googling would have been sufficient due diligence to pass on this investment. For the most part Theranos was not made up of sophisticated investors and any professional money that came in late should be fired.

everdev 8y ago

Or, the ability to invest in and profit from private companies.

leksak 8y ago

What about deincentivizing mega-companies and instead putting into law that there is a maximum size a corporation can be and if exceeded demands it to be split into two or more companies?