Media Coverage
Source: Daily Journal
Media Coverage
12.24.13
The Jumpstart Our Business Startups (JOBS) Act has become of the most significant pieces of recent federal legislation to impact capital markets and securities regulations. One aspect of the act that has been embraced by emerging growth companies is Title 1, which allows companies to confidentially submit their plans to go public with the Securities and Exchange Commission.
James Masetti, a Silicon Valley-based partner in Pillsbury’s corporate and securities practice, explained that under the act, IPO filings for emerging companies have to be publicly available for a minimum of 21 days before a company can begin its roadshow meetings with potential investors. As a result, few companies these days file publicly before the 21-day deadline, he said.
Speaking with firsthand experience, Masetti knows just how popular the confidential filing provisions have been with companies. “I've been a part of discussions where ... you might see companies that would not have started the [IPO] process but for that provision.”
Masetti wondered if 21 days is enough time for investors to thoroughly and comfortably vet potential investment candidates. “It's a debate as to if it's good for investors or good for companies or both. And at the end of the day, it's definitely good for companies. Whether it's good for investors, I'm not sure.”
He added that one potential consequence could be that over time, with so many companies going public and just 21 days to research each one, investors may take smaller stock orders “because they aren't as comfortable with the company or are more conservative on the valuation information.”