SEC Chair: We Didn't Consider 'Media Frenzy' When Writing IPO Rules

WASHINGTON (By Sarah N. Lynch) - The U.S. Securities and Exchange Commission is reviewing the rules surrounding private securities trading and initial public offerings, SEC Chairman Mary Schapiro said on Tuesday.

Speaking before a House of Representatives appropriations panel that oversees SEC funding, Schapiro indicated the agency is looking into two specific areas to determine if the rules are outdated and need some upgrades.

One area involves rules determining when a company must go public and start filing periodic financial reports. The other area pertains to the rules on private placements and how firms can qualify for exemptions from registering their securities offerings with regulators.

These issues have jumped into the spotlight as Wall Street banks and electronic markets offer investors a chance to buy and trade stakes in hot Internet companies such as Facebook and Twitter before they go public.

The most high-profile example has been Goldman Sachs, which had planned to offer both U.S. and foreign investors a chance to own shares in Facebook through private placements. Goldman later said it would not sell the shares to U.S. investors, citing the intense media coverage of the deal.

Schapiro said on Tuesday that Goldman feared the media attention might run afoul of rules that prohibit general solicitation to investors for private placements.

When these rules were written, "nobody thought about media frenzy," she said.

(Reporting by Sarah N. Lynch; Editing by John Wallace)

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