Facebook’s pending IPO has been a hot topic. The Securities and Exchange Commission has indicated that it is concerned about the private marketplace practices where shares are traded in companies before they go public. Forbes reports that, “The online secondary markets have emerged as a popular way to trade shares in recent years, after the recession stalled many companies’ plans to go public. Consumer interest has grown to a fever pitch ahead of Facebook’s IPO.”
The SEC recently brought charges against two fund managers whom allegedly misled investors in pre-IPO trading of Facebook Inc., Twitter Inc. and other social-media companies’ shares. It may be only the beginning of pre-IPO trading regulation on the part of the SEC. According to the Wall Street Journal:
The allegations by the SEC mark the first major regulatory blow to the market, which the agency says emerged in 2009 and which industry participants say has been fueled lately on the anticipation of a Facebook IPO in the coming months.
The actions show that regulators are concerned that the markets are murky and can fall short of the types of disclosures that typically accompany public-market investments. “The newly emerging secondary marketplace for pre-IPO stock presents risk for even savvy investors,” said Marc Fagel, director of the SEC’s San Francisco regional office, in a statement.
The crackdown comes as Congress considers a new law that the SEC fears could fuel fraud in the shares of closely held companies. The jobs bill, expected to be agreed on this month by lawmakers, is designed to help small businesses raise capital by easing many existing controls on fund-raising processes such as IPOs.
To brush up on the IPO process, PLI has an on-demand web program entitled, “How to Prepare an Initial Public Offering 2012″ currently available. Six one hour panels featuring experienced practitioners provide an overview of the IPO process discussed from the standpoint of the issuer (both domestic and foreign), the underwriters, their respective counsel, and the SEC. The on-demand web program also includes select articles from the featured Course handbook.
PLI is also presenting an Advanced IPO program with Horace Nash, Partner and Co-chair of the Securities group at Fenwick & West,LLP. The one day program will be scheduled for early September and will certainly cover the developments surrounding pre-IPO trading and the overall IPO process. Stay tuned…