Shutdown silver lining? Your IPO review comes after investors buy in | TechCrunch

"In a development born of the government shutdown, the SEC announced Thursday that companies can proceed with IPOs using an obscure automatic approval process, now with the added bonus of skipping pricing information entirely. What's happening is that with 90% of SEC staff furloughed, startups can file their paperwork and have it automatically become effective after 20 days. This option always existed; firms just rarely use it because they prefer having SEC reviewers actually look at their disclosures before going public."

"The difference here is that the SEC won't penalize companies for omitting pricing details during the shutdown, making this workaround more palatable. Put another way, there's still vetting, just the kind that happens after retail investors have already bought a company's shares, which seems . . . not good, but maybe we'll be surprised to learn that investor protection works better after the money changes hands."

With 90% of SEC staff furloughed, companies can use an automatic 20-day effectiveness process to take IPOs public and omit pricing details without immediate penalty. That automatic option has always existed but was rarely chosen because firms typically prefer SEC reviewers to examine disclosures before listing. The temporary non-enforcement of pricing omissions during the shutdown makes the automatic route more attractive. Regulatory vetting often shifts to after retail investors have purchased shares. Companies remain legally liable for disclosures, and the SEC can later demand amendments or pursue enforcement actions.

Read at TechCrunch