US SEC offers relief for IPOs stuck in limbo during shutdown

Companies launching initial public offerings while most of the government is closed will not have to include a specific price in their documents filed with the market regulator

The US Securities and Exchange Commission (SEC) offered some relief to would-be public companies stuck in regulatory limbo as the government shutdown drags on.

Companies launching initial public offerings (IPOs) while most of the government is closed will not have to include a specific price in their documents filed with the market regulator, under guidance released on Thursday (Oct 9). This is typically a key part of the process, which usually involves filings getting scrutinised by SEC staff reviewers looking for mis-statements or unclear disclosures.

“This is essentially making it easier to have an IPO or another registered offering even when the staff are not available during a shutdown,” said Erik Gerding, a partner at Freshfields and former chief of the SEC’s Division of Corporation Finance.

The change would reduce the amount of information required from companies, which can file paperwork with the SEC and have their statements automatically declared effective after 20 days.

Few companies typically choose to go this route and instead opt to seek a green light from staff reviewers. With 90 per cent of the SEC’s staff furloughed during the government funding fight, IPO reviews have ground to a halt, threatening SEC chairman Paul Atkins’ quest to “make IPOs great again”.

The SEC guidance warns that this special process does not preclude the staff from asking questions down the line or requiring companies from making amendments to their financial filings.

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Travel software firm Navan, tax advisory firm Andersen Group, and crypto custody firm Bitgo Holdings are among the companies that recently filed for IPOs and could have begun formally marketing the deals as soon as this week. Before the latest guidance, these firms would have had to market their potential listings with a specific price. BLOOMBERG