TheCorporateCounsel.net

Tomorrow morning, the House Financial Services Committee will hold an oversight hearing on the SEC in which all 5 SEC Commissioners will participate. If nothing else, the logistics of that hearing should be interesting. According to this  Committee memorandum, here’s some of what’s on the agenda:

– The growth in private markets v. public markets
– Public company ESG disclosures
– The impact of the Supreme Court’s Kokesh decision on enforcement actions
– Application of the securities laws to cryptocurrencies

Although not of professional interest to most of our members, the SEC’s fiduciary rule is also on the agenda, & that may set off some fireworks.

About Those Private Markets. . .

It isn’t just Congress that’s interested in the growth of private v. public securities markets.  According to this Reuters article, the continuing growth of private securities markets is something that’s concerning SEC Chair Jay Clayton as well:

“Why are people waiting so long to access capital from our public markets?” Clayton said. “Is it because there’s so much capital in the private markets or are we too short-term oriented, (is there) too much cost associated with going public?”  Companies traditionally went public roughly six years after founding. Now, they often are not coming to market until 10 to 12 years after they were created, analysts said.

The NYT’s recent article on the impact of Airbnb’s delay in going public on its employee option-holders illustrates some of the real world consequences of companies deciding to postpone IPOs.

IPOs: VCs Eyeing “Direct Listing” Alternative

We’ve blogged about the potential of “direct listings” as an alternative to IPOs – and a couple of high-profile unicorns have already opted to take this path in lieu of an IPO.  Now this “Axios Pro Rata” article says that another important constituency is taking a hard look at direct listings:

Venture capital’s call for more direct listings is growing louder, with a group of big-name investors and tech company executives expected to attend a private, invite-only “symposium” on the matter next month at a hotel in San Francisco. Among those expected to speak are Benchmark’s Bill Gurley, who’s been banging this drum for a while, Sequoia Capital’s Mike Moritz, who just write about direct listings in the FT, and Spotify CFO Barry McCarthy, whose company went public via a direct listing last year.

Why it matters is that there’s a growing investor consensus that the traditional VC-backed IPO process is antiquated and broken — too often benefiting a high-net-worth bank clients and a small pool of mutual and hedge funds, at the expense of issuers.

Big-time investment banks haven’t exactly covered themselves in glory with some recent traditional IPO filings, so if the VCs calling the shots on many deals revolt, the IPO process could be in for a big shake-up.

– John Jenkins