Bill Overview
Title: To amend the Securities Act of 1933 to permit issuers to submit draft registration statements to the Securities and Exchange Commission for confidential review for both initial public offers and follow-on offers, to set deadlines for when such statements shall be made public, and for other purposes.
Description: This bill allows an issuer of securities to submit a draft registration statement to the Securities and Exchange Commission for confidential review prior to an initial public offering or a follow-on offering. Under current law, only emerging growth companies are allowed to do so.
Sponsors: Rep. McHenry, Patrick T. [R-NC-10]
Target Audience
Population: People involved with or investing in public securities markets globally
Estimated Size: 15000000
- The amendments to the Securities Act of 1933 will affect all issuers of securities planning to go public or issue additional stock, as the bill extends the current provision of confidential review to all companies, not only emerging growth companies.
- The direct impact will primarily involve the companies that are planning initial public offerings (IPOs) or follow-on stock offerings.
- The bill will also indirectly impact investors who engage with these securities, as the timing and availability of information regarding the companies' financials and business plans will be altered.
- There will also be effects on the legal and financial advisory industries that support these companies in the IPO and follow-on offering processes.
- Impact is also extended globally as many non-US companies often list securities on US exchanges.
Reasoning
- This policy primarily impacts companies (both domestic and foreign) that are large enough to be considering public offerings, not just emerging growth companies. Consequently, the greatest direct impact is limited to a smaller subset of the population involved in securities issuance, management, or investment.
- The impact on investors relates to the timing and quality of information available to them, which could potentially influence investment decisions and strategies.
- Legal and financial advisors, such as securities lawyers and investment bankers, are also directly impacted since these procedural changes will affect their advisory services.
- Many average individuals’ exposure to this policy would be indirect, through their investments via retirement accounts or life insurance, where they are not directly engaged but can be impacted by market conditions resulting from these changes.
- Given the budget constraints, the policy implementation will focus predominantly on the procedural aspects of securities filing rather than wide-reaching educational campaigns, thus affecting primarily knowledgeable industry insiders.
Simulated Interviews
Investment Banker (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- The policy will likely streamline the IPO process, making deals smoother from our end.
- Increased confidentiality may lead to more companies opting to go public.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Tech Startup CFO (San Francisco, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- This allows us more flexibility and strategic planning without immediate public scrutiny.
- It's a positive move for us, potentially reducing the initial impact of going public.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Securities Lawyer (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- This policy will likely increase the workload initially as it involves educating clients on new procedures.
- It could enhance our offering by providing better strategic advice due to procedural predictability.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Retail Investor (Austin, TX)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 14/20
Statement of Opinion:
- I’m concerned that increased confidentiality means less information for investors like me.
- It might make things more opaque until later stages.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
CEO of an International Corporation (Miami, FL)
Age: 39 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 8.0 years
Commonness: 9/20
Statement of Opinion:
- Making confidential submissions an option is a strong advantage for international firms like ours.
- It aligns with data protection goals and strategic transparency.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Retired Financial Analyst (Los Angeles, CA)
Age: 65 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 11/20
Statement of Opinion:
- Any major change raises a flag until it's clear how mutual fund strategies might adjust.
- Retirees like me aren't directly affected but our investments could be.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Recent College Graduate (Andover, MA)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- This shift might mean more companies seeking IPOs, thus more job opportunities for new entrants like me in finance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Regulatory Affairs Specialist (Boston, MA)
Age: 41 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 7.0 years
Commonness: 10/20
Statement of Opinion:
- The change in policy ensures there is more throughput for IPOs, which could be good news for innovation-focused sectors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Software Engineer at a Fintech Startup (Seattle, WA)
Age: 30 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 13/20
Statement of Opinion:
- It's interesting as this might ease our transition when we choose to IPO.
- It doesn't directly impact my daily life but knowing there are smoother processes aligns with our growth goals.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Independent Financial Consultant (Houston, TX)
Age: 55 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 9/20
Statement of Opinion:
- This regulatory shift could bring more opportunities for advising on diverse and strategic disclosures, which is a necessary merit to our service offerings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $7000000 (Low: $5000000, High: $9000000)
Year 2: $7100000 (Low: $5100000, High: $9200000)
Year 3: $7200000 (Low: $5200000, High: $9300000)
Year 5: $7400000 (Low: $5400000, High: $9500000)
Year 10: $7800000 (Low: $5800000, High: $9900000)
Year 100: $10000000 (Low: $8000000, High: $12000000)
Key Considerations
- The potential need for increased SEC resources to handle the heightened number and complexity of filings.
- Economic ripple effects from making equity markets more accessible.
- Ensuring companies from diverse sectors and sizes can utilize the policy effectively.
- Monitoring for any unintended market responses or regulatory loopholes.