IPO Watch: What Lawyers Are Writing

The recent fallout (or should we say investor fury) after Facebook’s IPO had us wondering what lawyers and law firms are writing on the subject of initial public offerings and related topics these days. Here’s a quick look at some of what we found.


Underwriter Not a Fiduciary of a Security Issuer (Dechert LLP)

“The New York state appellate court recently ruled that the lead underwriter in an initial public offering does not owe a fiduciary duty to the issuer of securities to disclose conflicts of interest in connection with the pricing of the securities, unless the two parties have a distinct relationship of higher trust that arises apart from the underwriting agreement.” Read the update>>

The Facebook IPO and Disclosure of Cybersecurity and Privacy Risks: Tips and Lessons for Practitioners (Mintz Levin)

“The Facebook, Inc. initial public offering last month was probably the most anticipated IPO filing of the 21st century. In its S-1 filing with the U.S. Securities and Exchange Commission – the first step on any company’s journey to becoming a publicly traded company – Facebook has set the bar for S-1 disclosure in the areas of cybersecurity and privacy risks.” Read the update>>

JOBS Act: Initial Public Offering “On-Ramp” (TroyGould PC)

“The JOBS Act, signed into law on April 5, 2012, is intended to stimulate job creation and economic growth by improving access to the capital markets for smaller companies. In an effort to facilitate capital-raising for private companies, the JOBS Act created a new class of issuer known as an ‘emerging growth company,’ or an EGC. As described in greater detail below, EGCs are afforded certain benefits in the initial public offering (IPO) process, including the ability to make confidential submissions of registration statements, loosened restrictions on investor communications, and the option to comply with scaled disclosure requirements.” Read the update>>

Yes, Consumer, Real Estate, and Business Finance Companies, You Too Can Take the IPO On-Ramp (K&L Gates LLP)

“Just as HOV lanes were created to ease the commuting burden for those who meet certain requirements, the recently enacted Jumpstart Our Business Startups (“JOBS”) Act created the “IPO On-Ramp” to ease the burden of becoming and being a public company. To hop on the ramp, all you have to do is meet certain requirements, and unlike HOV lane limitations, the requirements are not very restrictive. You just need to be an ‘Emerging Growth Company.’” Read the update>>

New IPO Guidelines (Sheppard Mullin Richter & Hampton LLP)

“The China Securities Regulatory Commission (‘CSRC’), China’s securities regulator, recently unveiled new guidelines (‘Guidelines’) for China’s initial public offering system. The guidelines were issued pursuant to feedback that was gathered from the public earlier in April. The Guidelines present increased efforts by the CSRC to administer China’s securities market and to help restore investor confidence in what remains an uncertain economic climate. The Guidelines aim to better protect the interests of investors through greater transparency and financial integrity” Read the update>>

JOBS Act Gives Confidential Review Option for U.S. Emerging Growth Company IPOs (Pillsbury Winthrop Shaw Pittman LLP)

“New guidance outlines key rules for the new confidential review option for initial public offerings by emerging growth companies in the United States. The Jumpstart Our Business Startups Act (also known as the JOBS Act) became a U.S. federal law on April 5, 2012 and immediately authorized a confidential submission option for registered securities offerings in the United States by emerging growth companies.” Read the update>>

Direct IPO v. Reverse Merger: A Detailed Examination (Craig Butler)

“Under a Direct IPO a private company with the requisite number of shareholders files its own registration statement with the SEC to register its common stock, then a 15c2-11 with FINRA to get on either the OTC Bulletin Board or another trading marketplace, and then applies for DTC eligibility. The primary steps, including costs and timing, for the average smaller private company to get public via a Direct IPO are as follows…” Read the update>>

Preparing for an IPO (Jackson Walker)

“The company must select an underwriting team to manage the public offering of securities; the underwriters will undertake due diligence and negotiate an underwriting agreement that is reviewed by FINRA.” Read the update>>

NASDAQ, NYSE and NYSE Amex Propose Stricter Listing Standards for Reverse Merger IPO Companies (Proskauer Rose LLP)

“Initial public offerings effected through a reverse merger, exchange offer or other non-traditional process involving a shell company have garnered increased attention by the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the national listing exchanges. As a result of recent and highly publicized allegations of fraud, offerings involving promoters with questionable regulatory histories and certain auditing issues related to these transactions, on May 26, 2011, NASDAQ proposed a new, more stringent, listing requirement for such companies – specifically, a “seasoning” requirement on the part of reverse merger applicants.” Read the update>>

Corporate Governance And Disclosure Practices Of Venture-Backed Companies In U.S. Initial Public Offerings (Wilson Sonsini Goodrich & Rosati)

“Even though newly public companies have phase-in periods within which to comply with stock exchange requirements regarding majority board independence, each company surveyed had a majority of independent directors on its board, and most companies were substantially independent, at the time of the IPO.” Read the update>>

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