Anthony Scaramucci Says SEC Should Cut Some Red Tape So Everyday Joes Can Get A Piece Of SpaceX And OpenAI: 'Hard For The Public To Get Access'
News Summary
Anthony Scaramucci, the SkyBridge founder, stated in July 2025 that heavy-handed Securities and Exchange Commission (SEC) rules are preventing ordinary Americans from investing in the country's most exciting companies, such as Elon Musk's xAI and SpaceX, and OpenAI, because these firms have not pursued initial public offerings (IPOs). He believes burdensome regulations discourage firms from listing publicly and hopes the SEC will reduce red tape to make IPOs more attractive. Scaramucci contrasted Microsoft's 1986 IPO with today's market, noting that early investors then could build substantial wealth, whereas now growth often occurs behind closed doors among venture capitalists and private equity backers. He urged regulators to create a system allowing retail investors to back "all-star CEOs" like Coinbase's Brian Armstrong earlier in their growth cycles. Echoing these concerns, Robinhood Markets Inc. this month unveiled Robinhood Ventures Fund I (RVI), aimed at expanding retail investor access to private companies. The closed-end fund has submitted its initial registration with the SEC. This move comes as the number of publicly traded firms in the U.S. has declined from nearly 7,000 at the start of the millennium to about 4,000 in 2024, while private markets have surged to over $10 trillion. Furthermore, SoFi Technologies Inc. in July this year gave everyday investors a chance to invest in SpaceX, OpenAI, and other private companies through new funds, with investments starting as low as $10. Cathie Wood's ARK Invest also opened its ARK Venture Fund last year, allowing retail investors to back Elon Musk's private ventures, including SpaceX, X, and xAI.
Background
Over recent decades, the number of publicly listed companies in the U.S. has steadily declined, falling from approximately 7,000 at the start of the millennium to about 4,000 by 2024. Concurrently, the scale of private markets has surged dramatically, with valuations now exceeding $10 trillion. This trend has led many high-growth, innovative companies to remain privately held for longer periods, delaying or forgoing IPOs altogether. This shift has made it challenging for ordinary retail investors to access promising companies in their earlier growth stages, potentially missing out on significant wealth creation opportunities that were historically available through public listings, as exemplified by Microsoft's early IPO. The current SEC regulatory framework, while designed to protect investors, has also been criticized for its complexity and compliance costs, which can deter IPOs. In response, fintech firms and asset managers, including Robinhood, SoFi, and ARK Invest, are developing new mechanisms to provide retail investors with access to private markets.
In-Depth AI Insights
What are the underlying economic and regulatory forces driving the shift from public to private markets, and what are the long-term implications for capital formation and wealth distribution? - The significantly increased costs and regulatory burdens of being a public company, including compliance with acts like Sarbanes-Oxley, have made companies prefer to remain private. - The depth and liquidity of the private equity and venture capital markets have vastly improved, providing ample funding for private companies and reducing their reliance on public markets. - This shift contributes to wealth concentration among institutional investors and high-net-worth individuals, as ordinary retail investors are largely excluded from early-stage, high-growth investment opportunities, exacerbating wealth inequality. - In the long term, public markets may lose access to the most innovative and high-growth companies, diminishing market vibrancy and efficiency, and potentially leading to reduced visibility and transparency for innovation investments across the broader economy. How might the SEC respond to calls for reduced 'red tape' and the introduction of new retail access vehicles like Robinhood's RVI, especially under the Trump administration's pro-business stance? - Given the Trump administration's stated pro-business and deregulation stance, the SEC is likely to be receptive to proposals aimed at reducing barriers to public listings and may explore simplified listing pathways or amendments to existing rules. - However, the SEC faces an inherent challenge in balancing "fostering capital formation" with "investor protection." Any new policies will be scrutinized to ensure retail investors are not exposed to undue risks from investing in illiquid, opaque, and hard-to-value private companies. - New products like Robinhood's RVI will likely undergo rigorous review to ensure their structure is fair and transparent for retail investors, but at the same time, the SEC may seek a balance between innovation and risk to address market demand for greater investment access. What are the inherent risks and potential rewards for retail investors accessing private markets via these new vehicles, and how might this impact market efficiency and asset bubbles? - Inherent Risks: Private investments typically carry high illiquidity risk (difficulty in quick monetization), valuation challenges (lack of public market pricing), information asymmetry (less corporate transparency), and a higher likelihood of loss given the high failure rate of early-stage companies. Retail investors may lack the resources and expertise for thorough due diligence. - Potential Rewards: Investing early in successful high-growth private companies can yield significant returns, potentially outperforming average public market returns, thereby offering substantial wealth creation potential. - Market Efficiency and Bubbles: The influx of retail capital into private markets could, to some extent, "democratize" investing, but it also risks exacerbating valuation bubbles in certain private companies. If a large number of retail investors enter without sufficient experience or due diligence, it could lead to capital misallocation and increase systemic risks for retail investors during market downturns.