Traditionally there are three reasons to go public: (1) need capital, (2) founders or VCs need to cash out, or (3) have 500+ stockholders. Reason (3) has driven some otherwise cash rich companies with somewhat patient VC money to go public, and I expect it is what the SEC is looking at here. If pools try to buy, the SEC may look through the pool structure and count each of the pool investors as a separate investor, making it hard to keep under the 500 holder limit. A few non-tech companies that do not need capital have recently gone the "perma-private" route, with private exchanges set up to facilitate trading, but that is difficult to do, especially as more and more employees join up and expect stock and push on the 500 holder limit.
Valuations in the thinly-traded, easily manipulated secondary market are used to justify venture investments and acquisitions. If the SEC starts finding irregularities and clamping down, that's one more sharp pointy object bursting the bubble ...
What does being a public company mean?<p>Part of it is having to spend a large chunk of your profit on audits, which supposedly certify that your company is healthy and non fraud committing.<p>This certification was granted to Enron, Lehman Brothers, and many other companies that absolutely did not deserve it.<p>The S.E.C. should take this as an opportunity to learn something about what investors really want. It isn't regulation. Its profit and growth.