U.S. SEC to allow firms to file confidential draft statements before IPOs

[June 30, 2017]  By Sarah N. Lynch, Arunima Banerjee and Sangameswaran S

(Reuters) - The U.S. Securities and Exchange Commission said on Thursday it was expanding the Jumpstart Our Business Startups (JOBS) Act, by allowing all public companies to file confidentially prior to initial public offerings, in a move designed to revitalize the IPO market.
 

This is the first major policy announcement by new SEC Chairman Jay Clayton, in an effort to help companies raise money more readily.

Under current law, all publicly-traded companies with annual gross revenues of $1 billion or less can already file confidential draft IPO paperwork with the SEC.

These companies, known as emerging growth companies (EGCs), won this perk in the 2012 JOBS Act, as part of an effort to lower regulatory burdens and give them time to work out kinks with the SEC before unveiling IPO paperwork publicly and pitching to investors.

The new rule, which will take effect from Saturday, July 10, would be available for IPOs as well as most offerings made in the first year after a company has entered the public reporting system, the SEC said. (http://bit.ly/2sWW212)

The confidential review process after the IPO reduces the potential for lengthy exposure to market fluctuations, the SEC said.

Clayton has said he wants to reverse the steep decline in IPOs and give individual investors more access to smaller, successful companies.

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