Flexibility and growth.  Those are the two words being repeatedly talked about as a chief justification for the Private Company Flexibility and Growth Act (H.R. 2167) currently making its way through Congress.  The legislation would strike down what Rep. David Schweikert  (R-Ariz) calls a piece of “burdensome regulation” mandating that all private companies with a minimum of 500 shareholders file with the SEC and go public.

The new bill, in helping entrepreneurs “grow their business, remain competitive, and create jobs,” said Schweikert, who sponsored the bill, would raise the mandatory minimum from 500 to 2,000.  Companies would then be able to remain private for a substantially longer period of time.

“This regulation severely limits the growth stages for companies, which need time and flexibility to develop,” Schweikert said in a statement, adding that the legislation would “unwind rep-tape on small business and allow for growth and job creation.”

While some of the nation’s most well-known private companies like Facebook will almost certainly be lobbying Congress on behalf of the legislation, missing from the uncharacteristically robust bipartisan support the bill appears to be garnering is any meaningful discussion of a principle sadly anathema to Washington these days: transparency.

Though it might benefit a company to remain comfortably behind the anonymity of, say, a Second Market, what does the lack of transparency cost would-be shareholders who might also benefit from discerning earlier rather than later the pitfalls of a potential investment.

Many of the belatedly revealed exotic accounting practices of Groupon Inc. (GRPN), for instance, weren’t brought to light until after the company filed its S-1 with the SEC, requiring that the agency closely scrutinize the company’s financial soundness before approving its bid to go public.  At that time, Groupon, which was valued by some at $30 billion, was a growth story darling on Wall Street, and the sky—at least if you asked any of the company’s A-List underwriters—was the limit.

But as it made its way through the SEC’s “burdensome” regulatory pipeline, people slowly began to gather that the company may not be what it had led everyone to believe.  Indeed, after an SEC review uncovered Groupon’s accounting shenanigans, many people started to ask questions and the company’s estimated value plummeted by half.  Even then, there were still some who vocally questioned whether Groupon was worth as much as $15 billion.  And while investor appetite was generally hearty for slices of Groupon’s IPO pie earlier this month, it would have no doubt been even more aggressive if the SEC hadn’t outed the company.

If we’re going to be a truly free market—as Rep. Schweikert and others openly advocate for—isn’t it only fair that we adhere to one of the most cardinal principles of any free market and let those companies that are unfit meet their Darwinian end?  Keeping a weak company safely within the bosom of the private market any longer than necessary only seems like an exercise in prolonging the inevitable.  Besides, if ordinary Americans are expected to pull themselves up by their own bootstraps, shouldn’t companies be expected to do the same?