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 or “price-dependent information” 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.
Companies do remain legally liable for their disclosures, and the SEC can demand amendments later.
