SEC Chair Paul Atkins: Make IPOs Great Again 7/2/25

0:00Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, a special extended interview with SEC Chair Paul Adkins. I would argue here over the last several years, the SEC has been standing afoot efforts to innovate in the marketplace because things have been unclear. We've had regulation through enforcement. That day is over. The chair's approach to innovation, including expanding access to the private markets. Tokenization is an innovation. And we at the SEC should be focused on how do we advance innovation in the marketplace. Rethinking what it means to be an accredited investor and the future of crypto, SPACs, and IPOs.

0:50We have a really good program, I think, now addressing the crypto markets. With respect to the IPO market, you will start seeing our proposals coming out, so you can't build room overnight. Plus, a deal for Paramount and President Trump, an update from Capitol Hill on the president's megabill, and the huge compensation Meta is supposedly offering OpenAI employees to jump ship. Melissa Lee is on set with us to chat through it all. If they go to Meta because of the highest paycheck, they could easily leave Meta for another high paycheck. It's July 2nd, 2025, and Squawk Pod begins right now. Stand, Andrew, bye.

1:32In three, two, one, cue Andrew. Good morning. Welcome to Squawk Fox right here on CNBC. We're live at the NASDAQ market site in Times Square. I'm Andrew Ross Sorkin, along with Melissa Lee, who's hanging out with us. Joe and Becky are off today. and we got a lot going on between what is happening in Washington. Holiday shortly. We got a settlement with Paramount happening that could mean we have the deal finally. And the president's big tax and spending bill now on its way back to the House of Representatives this after passing the Senate by the slimmest of margins. Emily Wilkins is in Washington, D.C.

2:09this morning, staying up like all day, all night. Never stops for you. Well, maybe it will stop today, Andrew. I mean, we're going to see here. But if it's going to pass the House today, then Speaker Mike Johnson, he's going to have to change a couple no's to yes's before starting on this vote for the mega bill. Remember, in the House, if you have full attendance, Johnson can only lose three Republicans and still get the bill passed. But right now, there are roughly about a dozen members that are either planning to vote no or have some really serious concerns with this bill. Now, some of these members, they're Republicans from more centrist districts who worry they could lose reelection next year.

2:47over Medicaid and snap cuts. Others are, of course, your fiscal hawks. They've been frustrated for a while with this bill that adds more than$3.4 trillion to the debt over the next 10 years. That's a number updated just last night by the Congressional Budget Office. Some members are annoyed that some of the clean energy tax credits are still in the measure. The Senate measure remembers does allow wind and solar programs to get some tax credits if they start construction in the next year. I chatted a bit with Congressman Tim Burchett. He told me he's in the I'm not sure column and needs more time, but he thinks that it's not just him.

3:24He thinks more time in general is needed to hash out disagreements with the bill. And he's skeptical that Republicans are even going to be able to agree to a procedural rule vote. There's probably about a dozen that will probably vote against the rule. And if the rule goes down, it doesn't necessarily kill the bill, that could allow some time to work on the bill and maybe some calmer heads will prevail. Johnson told reporters last night that while the Senate made some changes that his conference doesn't agree with, he will work to answer all concerns and get the bill, specifically the bill the Senate passed, delivered before July 4th to Trump's desk.

4:04And of course, guys will be keeping a very close eye on all of the back and forth negotiations that are going to have to happen today on Capitol Hill for Johnson to get this thing passed. This may sound like the silliest of questions. Is everybody in Washington right now or is any of these people actually left town? So the Senate has left town. The House is either in town or they are trying to get to town because we had a giant thunderstorm last night here and a bunch of flights were canceled. But the goal was for all the House members to be back today. And that is the plan. But of course, if the House changes this bill in any way, shape or form, it will need to go back to the Senate.

4:41And the Senate has just left town. So there's definitely if any changes happen, there's not going to be a way to get this done before July 4th. So all this talk, Emily, about negotiations and working things out, that would basically set back the timeline. It wouldn't, Melissa. And I think, of course, you know, when you talk about these negotiations, sometimes the ask for members or sometimes the things that leadership can sort of give to get members to yes isn't necessarily a change in the bill text in the Trump mega bill. So we'll see if there's a way to go forward with that. Of course, the other thing we're keeping an eye on here is the White House is Trump himself.

5:17Of course, we've seen with a lot of these major votes that he has been the one to come in at the last moment, really twist some arms and get members to support. And so that's another thing we're keeping an eye out for today is exactly what role Trump and the White House are going to play in getting this thing over the finish line. Okay. Emily, we're going to keep our eyes on this, of course, and I'm sure we'll be talking to you a lot more about it. Media giant Paramount settling a lawsuit filed by President Trump regarding a 60 Minutes interview last year with former Vice President Kamala Harris.

5:48Trump was seeking$20 billion in damages related to the interview, which he claimed was deceptively edited in order to favor Harris in last November's election. The case entered mediation in April. Paramount saying it will put$16 million toward Trump's future presidential library, minus lawyer fees. It said none of the money would be given to Trump directly or indirectly. The settlement does not include a statement of apology or regret. It comes as Paramount is trying to get the government's approval for more than$8 billion merger with Skydance Media. So that's going to likely move things forward pretty quickly.

6:22By the way, what do you think the legal fees are? Oh, you think it's going to eat into that amount, the$60 million amount, by a lot? By default. I mean, this has been going on for how many months? That's true. I mean, this is going to be millions and millions and millions and millions of dollars of legal fees. By the way, it could be$10 million of legal fees from both sides to begin with. Maybe it's the same law firm handling the merger. I don't know the answer, but I'm assuming it's a lot. Meantime, a Figma filing its S1. By the way, I love this company, just so you know, because I use this stuff.

6:57And I think Figma is awesome. The design software maker planning to go public on the New York Stock Exchange under the symbol FIG. I don't know if I love it as a stock, just full disclosure, but the product. According to the filing, Figma reported$821 million in revenue over the past year with a 46 % year-over-year growth rate. You may remember, I mean, this was a long, long journey here. In 2023, Adobe had tried to buy this company and then abandoned its plan to take over Figma in what was then a$20 billion deal. In his founder letter, CEO Dylan Field, who is a Thiel fellow, we should mention, writes, quote, given the trend of many amazing companies staying private indefinitely, you might be wondering why I've decided to take Figma public in the first place.

7:45He writes about obvious benefits, including liquidity, adding, quote, I like the idea of our community sharing in the ownership of Figma. And the best way to accomplish this is through public markets. He later writes, expect us to take big swings when we see a chance to invest in our platform or pursue M &A at scale. And we just had a big conversation yesterday on our broadcast about just the idea of so many of these companies actually staying private for longer and what it means to the public markets. Also, by the way, what it has meant for a long time, just to talk about liquidity, illiquidity of just how much money venture capitalists and private equity have not gotten back.

8:21There's no exits happening, which means that the pension funds have no money to give, and they don't have any money to get back. And so there's got to be a way for more companies to go public. We also had a guest on yesterday talking about how they're now trying to, I don't know if you saw this, tokenizing effectively the private market and what that means. I don't know. We'll have to see whether. Or increase liquidity, increase. I don't know what regulators should really be thinking about that. It's a little bit more like ICO. You remember initial coin offerings? Companies that are private are considered private because they don't have disclosure requirements that public companies do.

8:57So once you start allowing the public to start buying into private companies that are not accredited investors, it's a very complicated scenario. There's also a move on the SEC to... To get rid of accredited investors. Right, exactly. to basically widen the net as to who is considered accredited. Basically, anybody would be if they had the right education as a proposal. So that's also an interesting element of that whole discussion. Open AI's CEO, Sam Altman, addressing Mark Zuckerberg's meta platforms. He's trying to hire away Open AI's workers. In a memo to Open AI researchers that it was obtained by Wired, Altman said the following.

9:35He said, quote, meta has gotten a few great people for sure, But on the whole, it is hard to overstate how much they didn't get their top people and had to go quite far down their list. Altman dismissing what he called mercenaries and said that he believes Meta's behavior will lead to cultural problems for that company. He also said OpenAI is evaluating compensation for its employees and that he thinks there is much more upside to shares of OpenAI than of the publicly traded Meta. Now, CMBC has reached out to OpenAI for Common just to put some numbers on this thing. supposedly some of these people have been offered, you know, three, four, multi-year deals worth $300 million.

10:16These are for scientists and engineers, with some of them receiving$100 million straight up in year one,$100 million. And one of the things that's interesting that I do have some agreement or sympathy for Sam Altman's argument, and I actually wonder what what will happen. You know, he's raised the question of what happens to the culture of a Meta. If you're offered, if you're getting paid$400 million, virtually no matter what, or$100 million virtually no matter what, meaning it's not a fully performance-based thing, how hard do you think these people are really going to work? Right. Or if they go to Meta because of the highest paycheck, they could easily leave Meta for another high paycheck.

11:02There's no loyalty to the company either. So it's an interesting dynamic. And we'll see how Met is able to take this. They're trying desperately to transform LAMA into one of the truly large language models that's used. I mean, I think it is, and I think it's been quite successful, but obviously not nearly as successful as what Anthropik's done or OpenAI's done or Google's done thus far. Cheese will be next. Next on Squawk Pod, who gets the opportunity to invest in private companies? Historically, it was about being accredited, a monetary threshold. SEC Chair Paul Atkins is leaving the door open for tweaks to standing law.

11:44There is a lot of demand on the investor side to be able to invest into private products. But that has to be done, I believe, with our eyes open because we don't want to have people go in where they don't understand what they're doing. What that means for you, for public companies and for the new efforts from the likes of Robinhood, Vanguard and startup Republic to expand access to the private market. That's right after this break.

12:20This is Squawk Pod from CNBC, today with Andrew Ross-Sorkin and Melissa Lee. And they're following up on a conversation from yesterday's Squawk Box with Republic co-CEO Andrew Durgey. Now, Republic is offering unaccredited investors an opportunity to get in on private companies pre-IPO. And it's starting with SpaceX. But there is a legal reason why unaccredited investors have not historically had access to pre-IPO shares of companies. Legal reason upheld by the SEC. I don't know if I want to say we're at odds. We're using the laws that exist. We're not bypassing anything. We're using a pre-existing structure that has been tried and true.

13:01Right, but you recognize the intention of the SEC law was to prevent the public with less than a million dollars of being an accredited investor from accessing private company stock because the view was that they didn't have the same kinds of disclosures and rules that a public did. And that effectively, this is a workaround to that. I think the reality is when you really titrate it down, ultimately, we very much limit what people's exposure can even be to this, right? The maximum that anyone can do in the SpaceX offering is$5 ,000, right? So we are giving people an opportunity to participate in a very limited capacity and something that they've been kept out of previous.

13:41If you want to hear that full interview with Republic's co-CEO, scroll in your feed to Tuesday's Squawk Pod. But for now, let's get back to today's big interview. Up and enter. Q. We are joined right now at the table by SEC Chairman Paul Atkins. We're thrilled to have you. Thanks for having me. A lot going on in Washington, as you know, drinking from a fire hose at this point. And we've got about a million questions about the market, about what you're doing, about what the regulatory landscape looks like. And so there's so many different places we can go. I wanted to start with actually something that happened on this set yesterday, if you'd indulge me.

14:23Only because it was such an interesting conversation. And it's now even, again, in the press today, there's Vanguard doing something similar. Which is, you know, we've long talked about public markets and the benefits of public markets. But we've also talked about how in the private markets, there's so many companies that are still private and what it takes to get them to be public. But one of the things that's happening now is this idea of trying to let the public have access to the private markets. And there was a company that came on yesterday. They're, quote unquote, tokenizing, if you will, shares in a private company, in this case, SpaceX.

14:58You have Robinhood now doing something similar, but they're doing it outside of the United States in Europe. I'm so curious just how you, given where you sit, think about what's happening right now. Well, Andrew, it's great to be here. Thank you very much for you all having me. You know, the markets have changed a lot, obviously, over the span of the last few decades. And so whereas the IPO market used to be like when I was a young lawyer starting in the mid-80s out, that was a way for companies to raise money to build property, plant equipment, developed their R &D and things like that. Apple, Microsoft, all of those companies started that way.

15:38Now, fast forward to now, you have really robust private markets. And so there hasn't been that drive to go public. And part of that also is not just the capital that's there in the private market, but also the impediments to be a public company. That's litigation threats, just the cost of doing, of being public and the other. And so what is the answer then? Is the answer to make it more attractive to be a public company or is the answer to make private markets more accessible to the public? And more transparent. Right. I mean, that's a key aspect to this. I mean, companies stay private for a reason.

16:18One of the reasons is they don't have to file as many things with the SEC. They're not the same disclosure requirements. But to protect investors, particularly average investors, you would think you want that transparency. Right. Well, so that's exactly true. The law is clear as to public companies and what needs to be disclosed. And so what my goal is, is to make IPOs great again, basically, is to there's been a lot of red tape and a lot of impediments, as I mentioned. I think if we address those sorts of aspects, I think we can make the public markets. What are the one, two, three top things you think you need to do to make being a public company, as you say, great again?

17:03Well, first of all, the disclosure is important. But if you look at, I dare you all to look at an average 10K or a proxy statement and tell me what actually is going on with the company. Over the years, there has been so much disclosure. A lot of it is CYA, basically, for potential lawsuits. So if we can address those sorts of aspects, I think we can make it better and more attractive to be a public company. In the meantime, though, there are these efforts taking place to effectively change what it means to be a, quote-unquote, accredited investor in private markets. Historically, you've had to have a million dollars as a sort of threshold, with the idea being that if you're wealthy enough and have over a million dollars, you can afford to lose money or do something that's, quote, unquote, more risky because you don't have all the same disclosure requirements in a private company.

17:58But you, I think, have a different view of this. Yeah, well, I think we will definitely take a look at those rules to see what should be tweaked because there is a lot of demand on the investor side to be able to invest into private products. And so, but that has to be done, I believe, you know, very with our eyes open because we don't want to have people go in where they don't understand what they're doing and they're not well equipped. And so what would that mean? We talked about tests or other kinds of things to suggest there's an education process and that it's the education that would make you accredited, not how much money you actually have.

18:39Well, so there are lots of different ways. I mean, part of the accredited investor standard came about because the idea is, well, if you don't know about it yourself, you can hire somebody or you have the means to kind of ferret out the information and make decisions or hire somebody to make decisions for you. So we need to take a look at that. But we also need to look at, for example, for long-term investing, for people investing for retirement in funds that are very long line. You know, the aspects about private markets is liquidity is not what it is in public markets. Valuations are a little bit more tricky, let's just say.

19:21And so those sorts of things, you cannot go in to a private fund or a private investment and expect to turn that around. What do you make of these sort of tokenization efforts? I mean, it seems to me that we have rules. We could debate whether the rules are the right rules and maybe they should be changed. But given the rules that are in place and the intention of the rule today, it seems to me that the effort to sort of, quote unquote, tokenize something, you know, an underlying asset and to sort of use this structure is really effectively just a workaround to what the actual intent of the rule is.

19:56Well, I guess I disagree with that a bit because tokenization is an innovation. And we at the SEC should be focused on how do we advance innovation in the marketplace. And so I would argue here over the last several years, the SEC has been standing athwart efforts to innovate in the marketplace because things have been unclear. The rules have not been clear. We've had regulation through enforcement. that day is over. We are now, my whole goal is to make things transparent, you know, from the regulatory aspect and give people a firm foundation upon which to innovate and come out with new products so that they know what they're doing.

20:40I think there are two things to think about, Andrew, and that's tokenization of U.S. stocks, which is one thing which could drive a lot of cost savings for all parties involved. Oh, I'm not against tokenization. I'm saying if you wanted to tokenizing SpaceX, which is a private company. And then there's also access to private credit, I think you were mentioning, which is a complete individual investor access to private credit, which is also another sort of tricky area in that this is also, as you mentioned, it's not as much liquidity. You know, valuations are very difficult, particularly, I would imagine, for an individual I mean, there are a lot of things here that are new frontiers for investors.

21:25Where do you stand on that? Well, so two questions. So as far as tokenization, other innovations in the marketplace to make trading and holding securities easier. and with quick settlement, my predecessor pushed for what we call T plus one, meaning settlement and clearance the day after the trade, the trading day. And so tokenization and other aspects of doing that, tokenization in the marketplace, is yet the next step to have much more efficiency in the marketplace and certainty of having a trade. settle. Way back in the 60s, 1960s, before our time, basically the New York Stock Exchange had to close for two days a week just to catch up on the paperwork from the stacks of paper certificates that were going from one brokerage to another.

22:24So then came DTCC and digitization of a securities book entry. That was a huge advance. And so now we are in a new world. Where do you land on SPACs? We had sort of a big number of blank check companies go public a couple years ago. Most of them did not work out. It was a bad vintage, if you will. I've argued that SPACs could be very interesting if, and I don't know if you'll agree or disagree with me, if whoever the sponsor or promoter is, is locked in place for whatever duration of the forward-looking statements they make about a deal is. Meaning, if you want to come on TV or put in your documents or do whatever you want and say, here are the future prospects for this company and we'll give you the numbers we think is three years out, four years out, and five years out, great.

23:18You should be locked for the three, four, and five years out. Part of the problem was that these promoters and sponsors of these things could technically, depending on where the stocks traded and other things, they had ways to get out, oftentimes six months into the process. Yeah, well, so I don't have anything against SPACs, basically. I do think that, again, we were talking about IPOs and how the incidences of IPOs have really decreased over time. And so SPACs are yet another symptom of that because it's a much faster way of going public. You have a ready-made company. Disclosure is very important.

23:58Obviously, the structure of it is very important. But I think if we pay attention to going public and what are the impediments for people to access the public markets through IPOs and other means like that, I think the other situation will be able to solve itself. So let me just ask a philosophical question, because what I hear you saying is two things at the same time. One is I want to fix the system so that the IPO market is a more attractive place to be. And if I do that, I won't necessarily have to deal with tokenizing private companies, and I won't have to really think too much about SPACs because those will be less attractive options compared to going public.

24:39My question is, since we all have to walk and chew gum at the same time, what do you do while you're working on fixing the IPO system to make it more attractive? You have all of these other things going on in the background, in the foreground. Right. What do you do about that? Well, so that's, I mean, I've been on the job for two months, which is great. And again, like you said, drinking from a fire hose. So we will, you know, we are going about it. We have a really good program, I think, now addressing the crypto markets. So we have that underway, working with folks in the administration and on the Hill.

25:15So there's, you know, moving afoot with bills, two bills, particularly on the Hill. So with respect to the IPO market, you will start seeing our proposals coming out. We obviously are cognizant of what's going on. There have been new rules adopted by the Commission the last couple of years regarding SPACs. Those were very rather controversial, let's say. So we'll be looking at all of those things. So you can't build room overnight, but we'll be addressing that. Is there a time or place for the SEC to say we should halt the tokenization of private companies for now until we can examine this and the impact to the markets and to investors?

26:00Well, again, I think, you know, we have our rules. Well, we have our rules. And again, I'm looking at that as an innovative way to address, you know, the workings of the marketplace. I don't view that as a wholesale new type of product. And so I view that as beneficial. I have a question about insider trading, an issue that the SEC has always sort of oversaw, but there hasn't been a huge number of insider trading cases in recent years. I mean, not big famous ones. But there's this whole crypto industry that is not really regulated. And I'm curious what you think of that, which is to say that there's lots of people doing things.

26:43And the reason I mention this is three or four months ago, if you remember, somebody developed a Sorkin coin briefly for Hot Minute worth, I think, a couple hundred million dollars at some point. It was a wild thing. And what I saw happening was people were creating these telegram and signal accounts. And they were all talking to each other about how they were going to buy and sell. I mean, it was literally like the pools of the 1920s. It was a very interesting thing to watch. And the question, just to see how it was happening, and I was curious where you think the SEC should play in that universe.