06/30/05: TMF's "IPOs Quiet No More"
By Tom Taulli
fool.com
Starts off:
"The Securities and Exchange Commission has been a contentious place lately, with a variety of 3-2 rulings. But yesterday there was something that all SEC commissioners could agree on: rolling back the "quiet period."
The quiet period limits communications from a company when it's raising capital from the public. This starts when a company files a registration with the SEC and ends 25 days after the company issues stock. During this time, a company's communications are strictly limited to the prospectus, which is usually a long, legal-type document.
Interestingly enough, there is no such explicit rule in the securities laws. Rather, the quiet period is implied by the tight disclosure restrictions put on companies that file registration statements with the SEC, which are required for a company that raises capital from the public."...
ends with:
..."For so-called "well-known seasoned issuers," communications are completely open-ended, so long as they do not violate the fraud provisions of the securities laws. These issuers have been reporting to the SEC in a timely fashion for at least one year and have a market cap of at least $700 million or have issued $1 billion in non-convertible securities. In fact, these companies may even be able to advertise their offerings on the Internet or television. Just imagine if Google had done that.
Those companies that are in the process of an IPO will be able to disclose more information to the public (but not as much as a seasoned issuer) by, say, posting webcasts or even granting interviews.
In fact, this is what Morningstar did with its recent IPO. That is, it published its road show -- with slides and a transcript -- in its prospectus. Actually, it's been one of the top IPOs of the year. Maybe in light of this, we'll start seeing more companies webcasting their road shows, helping to level the playing field." |
