My article in Traders Magazine: Going Public in a Post-Spotify World
Going Public in a Post-Spotify World
More than 1,450 companies globally IPO’d in 2017 -- the busiest for new listings since 2007. Yet while there were the most IPOs in a decade worldwide, U.S. companies, with annual sales of less than $500 million, may believe they are too small to go public. This may be a contributing factor to widely-cited data indicating the number of IPOs in the U.S. has fallen by about half over the past 20 years. There are viable, alternative paths to going public for small- and micro-cap companies without incurring the costs and complexities of the overhyped IPO. While it wasn’t without hype and high-expectations, Spotify’s direct listing on the New York Stock Exchange shines a spotlight on non-traditional, but reliable approaches to entering the public markets.
The Slow PO
In contrast to the traditional initial public offering (IPO) process and more aligned with Spotify’s ap...more
FINRA Regulatory Notice 17-14 Response to FINRA’s Request for Comments on FINRA Rules Impacting Capital Formation
OTC Market Group recently submitted a comment letter on FINRA Rule 6432 to the Financial Industry Regulatory Authority, Inc. (FINRA) in response to the request for comments on FINRA Rules Impacting Capital Formation.
In the letter, we recommend that FINRA work with the SEC to make Rule 6432 more efficient and regulatorily relevant by adopting a disclosure-based approach and promoting the public availability of information. Our letter recommends the following simple modifications to the administration of Rule 6432 that would provide immense benefits to smaller companies looking to access well-regulated secondary markets:
Making the Form 211 review process more efficient by adopting an objective review standard and implementing a three-day turnaround;
Requiring that Form 211 materials be made public and issuers (not broker-dealers) be liable for any misrepresentations;
Outsourcing certain Form 211 functions to IDQSs, including allowing an IDQS to file a Form 211 directly with F...more
FINRA Regulatory Notice 17-41: Response to FINRA’s Request for Comment on the Effectiveness and Efficiency of Its Payments for Market Making Rule
OTC Market Group recently submitted a comment letter to the Financial Industry Regulatory Authority, Inc. (FINRA) in response to the request for comments on the Effectiveness and Efficiency of its Payments for Market Making Rule 5250.
In the letter, we recommend amendments to Rule 5250 that would allow issuers to compensate broker-dealers for the reasonable out-of-pocket expenses involved in preparing and submitting a Form 211. Finding a broker-dealer to file a Form 211 presents a daunting initial hurdle for companies looking to access the public markets in an efficient and orderly manner. From the broker-dealer perspective, filing a Form 211 involves collecting, reviewing and analyzing the issuer’s disclosures, as well as responding to FINRA’s comments and questions. The process presents a significant cost and time commitment, with no possibility of remuneration.
Rather than banning payments all together, FINRA can more effectively facilitate small company access to public m...more
Short-Term Gain = Long-Term Pain?: Building a Sustainable Public Company with Longer-Term Investors
Much attention has focused on recent Reg A deals (Arcimoto, Shiftpixy, Chicken Soup for the Soul Entertainment, Myomo and Adomani) that have listed on national exchanges (Nasdaq and NYSE). But the question remains, is this the right move for small-caps seeking to become public companies through innovative capital raising frameworks? After the excitement of ringing a bell has worn off, the visibility has dissipated, the bankers have been paid and the festivities come to a close, a bigger challenge begins for management to grow the value of their business while balancing the resource-intensive requirements of maintaining a listing on a national exchange.
Reg A was designed for small companies, start-ups, entrepreneurial innovators and those seeking to alleviate the cost, time and complexity associated with the traditional IPO process. Part of the larger JOBS Act story, this legislation increased opportunities for transparent and online capital raising whereby small cap ...more
CfPA launches Knowledge-Sharing platform with Brainsy.com
