Mark Cuban: Here's the problem with regulators

Mark Cuban on SEC vs. Silicon Valley, & more
Mark Cuban on SEC vs. Silicon Valley, & more

Regulatory action on privately funded companies threatens to disrupt growth and the path to the public market, billionaire investor Mark Cuban contended Friday.

Private valuations in Silicon Valley, particularly the so-called "unicorns" worth $1 billion or more, have drawn the attention of the Securities and Exchange Commission. The agency's Chair Mary Jo White addressed the concerns in a speech at Stanford University on Thursday, calling for companies to be honest with investors about their worth.

Cuban argued that, if the SEC chooses to get involved with Silicon Valley, it should set clear rules to avoid stifling growth or creativity.

"If you don't know what the rules are, it just gives the SEC room to take whatever actions they want," the "Shark Tank" investor and Dallas Mavericks owners said on CNBC's "Closing Bell."

Mark Cuban, investor, entrepreneur and owner of the Dallas Mavericks
Frederic J. Brown | AFP | Getty Images

White's comments came amid mounting concerns about the number of companies with soaring valuations.

"The concern is whether the prestige associated with reaching a sky-high valuation fast-drives companies to try to appear more valuable than they actually are," she said in the speech.

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Cuban argued the SEC should make clear rules so private companies and investors know where they stand with regulators. He believes investors lack liquidity in private markets, and companies should have an easier time going public. He said the SEC could make that process more difficult.

"The one thing that could make the whole thing go backwards instead of forward is uncertainty," he said.

— Reuters contributed to this report.