The monthlong partial government shutdown is forcing some companies to seek alternate routes to go public while the main markets regulator is unable to greenlight IPOs, The Wall Street Journal reports.
Biotechnology companies Gossamer Bio Inc. and TCR2 Therapeutics Inc. have been exploring a little-used workaround that would let them begin trading without the usual Securities and Exchange Commission signoff, according to people familiar with the matter.
The move involves changing language in an IPO filing to make it automatically effective after 20 days. It is legal, and the SEC reminded companies after the shutdown began that the option was available.
But the Nasdaq Stock Market, where both companies are aiming to list, has balked at firms using the method over worries that such deals could be vulnerable to regulatory or legal challenge later on, according to people familiar with the matter. Still, the exchange hasn’t ruled it out in certain cases, one of the people said. Some bankers have also been wary of such deals.
Companies can legally sell stock to the public 20 days after filing a registration statement that details required financial information and business risks. But in practice, most companies ask the SEC to trigger their filing after an in-depth review of their disclosures. Read the full story.