The Corporate Law Group

IPO’s and Opt-Outs

We saw an interesting article recently concerning the place in our world for IPO’s.  The article argued that whereas IPO’s used to raise money for small companies, now they don’t really serve that function very well.  The flip side is that growing companies that don’t want to be public are stuck once they reach 500 shareholders and decent sized assets, in filing periodic reports whether they want to encourage a market for their stock, or need capital, or not.  Google didn’t need the money and Facebook doesn’t either.  And, of course, our increasing web of regulations (a lá Sarbanes Oxley) all based in an effort to regulate away dishonesty (good luck with that; how’d it work out in Bernie Madoff’s case) makes doing business harder and harder for the honest folk.  We think that our markets are not well served in any way:  Expense, burden; capital formation; reporting, ease of use, transparency, etc.  They simply don’t work. 

We’ve advocated before for a securities opt-out.  You don’t want SEC protection, opt out of their protection, good luck, and caveat emptor.  Maybe we need some wholly unregulated markets for trading securities.  The family Buzz has wanted for a long time a TSA-free airline.  Everyone get on the flight with your Louisville sluggers and during flight we’ll see whether the good guys or the bad guys are better batters [credit where credit is due:  That was the idea of a director of a public company we represent].  If the nanny state was created for our own good, can’t we decide we don’t want the protections offered?  In any case, we’ll likely see incremental changes in the SEC’s watchful eye but we doubt we’ll see any real reform.  Maybe we’ll just keep exporting public offerings to Britain, Canada, and Hong Kong.

Paul Marotta

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