Brooklyn Journal of Corporate, Financial & Commercial Law


Matthew Whang

First Page



This Note traces the economic and legal factors that led to the proliferation of unicorn companies—private, venture-backed startups valued over one billion dollars—over the past decade and argues that unicorn companies should be subject to fewer security disclosures. A lighter disclosure regime fosters greater private-market illiquidity, which, in turn, better aligns an investor’s profit motive with prudential corporate management. Because they cannot flee at the first sign of trouble, shareholders are incentivized to play a more active role in overseeing management and eschew risky decisions that threaten the well-being of a company to avoid losing their investments. Given the dynamic between market illiquidity and increased shareholder oversight, this Note advocates for the adoption of a regulatory stance that disfavors onerous disclosure requirements on private companies but prefers startup companies to go public earlier in their lifecycles. To pressure companies to IPO sooner, the shareholders of record threshold in Section 12(g) of the Securities Exchange Act should be restored to its pre-JOBS Act level of 500 from its current level of 2000.