An interesting development: the Council of Institutional Investors has acted to pause the effectiveness of an SEC staff-approved NYSE rule change permitting capital-raising "direct listings." A capital-raising direct listing lets a company go public by listing its shares on an exchange -- and raising capital -- without engaging (and compensating) IPO underwriters. "Direct listings" like these have some pros and cons; a major "pro" is avoiding underwriting fees (... investment costs matter ...).Apparently the Council of Institutional Investors isn't conceptually opposed to capital-raising direct listings. Instead, the Council wants the SEC to first complete the overhaul of the country's proxy voting system (aka the SEC's "proxy plumbing project"). The Council wants the overhaul completed in order to clarify and preserve investor rights that have been called into question in a capital-raising direct listing occurring in the current proxy voting system.
Thursday, September 24, 2020
Going Public via a "Direct Listing" - Vested Interests (... Wall Street Compensation) at Risk
Related source material: (1) The Council of Institutional Investors' letter to the SEC asking the SEC to deny a NASDAQ proposal similar to the NYSE proposal. October 8, 2020; (2) Investing in the Public Option: Promoting Growth in Our Public Markets - Remarks of SEC Commissioner Lee at The SEC Speaks in 2020. October 8, 2020 (scroll to the caption "Direct Listings").