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oversees SEC funding, Schapiro indicated the agency is looking into two specific areas to determine if the rules are outdated and need some upgrades.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)

Copyright 2010 Thomson Reuters. Click for Restrictions.

Comments

[ScottWhite]

07:10 AM on 03/16/2011

It takes media frenzy for this agency that has the gall to say it oversees the securities world to only now consider these unfair rules. Sure...no problem offering huge privates, through placement, to the public without disclosures/public prospectuses while small businesses stand in the soup line begging for basic operating capital and credit. There's many types of class warfare going on...personal and small business.

[arlandbaee]

01:19 AM on 03/16/2011

I just love how this article makes it seem like it was Goldman's idea to back out. What a crop of fungus.

[Lolie Culley]

12:28 AM on 03/16/2011

We need to audit all these people running our country. We need to find out how much money they kept from the taxpayers bailout. The millions that Mozilo pay for fraud didn't ended in peoples pocket. It was devided in few peoples pocket. We know who they are.

[Anym]

07:31 PM on 03/15/2011

Any person with a brain can tell you the real reason the rules were written this way

http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

[naughtYmike]

07:30 PM on 03/15/2011

They are not stupid; they have been bought.

[Craig2]

06:46 PM on 03/15/2011

The 900# Gorillas are so confident... we really shouldn't question their actions. I mean look at their track record at protecting Oligarchtical wealth? Near perfect.

[johnb123]

06:30 PM on 03/15/2011

Hey SEC, the internet bubble was over 10 years ago, you're alittle late.

[totaldisbelief]

06:24 PM on 03/15/2011

They didn't consider enforcing the rules either.

[Heavy]

06:14 PM on 03/15/2011

The SEC is a joke.

[jeffp26]

05:52 PM on 03/15/2011

Mary Schapiro has spent her entire career thinking . . . about how to enrich Mary Schapiro.

Protect investors? Mary couldn't care less. She's all smoke and half a cracked mirror.

[Mister Grumpy]

05:47 PM on 03/15/2011

The SEC only thinks about itself......... and those they protect.........

[AlexNYC]

05:47 PM on 03/15/2011

Does anybody actually still believe that the SEC is an agency that regulates Wall Street instead of protecting it?

[jeffp26]

05:52 PM on 03/15/2011

People who think Sarah Palin adds to the discussion.

[Gebby]

05:56 PM on 03/15/2011

the sec lost its reputation under bush when he put chris cox a congressman from california in charge. chris cox a republican pro business congressman did not know squat about wall street. he failed to enforced regulations in place in the name of too much regulations. he was told what ot do by the brokerage community. it was better when a chairman that believed in the role of government regulation was in charge. dont forget the changes to every corner of our nation that came when gwbush was put in office by the supreme court.

[TeraWatt60]

05:41 PM on 03/15/2011

Why is it when I hear creatures like this SEC Mary Shapiro talk about "rules" I keep thinking back to the "Payola" scandals in the 1950's recording industry where a labels paid to have their songs as #1 on the Hit Parade.

[Sandra Stevens-miller]

05:37 PM on 03/15/2011

In an industry that moves at a speed unparalleled in history, how could SEC leaders have possibly been unaware of media frenzy? I find this not only incredulous, but absolutely wreckless and grossly in error. They should be held accountable, along with the media, for the global financial meltdown that occurred as a result. This is absolutely shocking and as terrifying as the tsunami that has just hit Japan. The shocks felt in Japan from the earthquake are also reflected, just as severely, in their Neiki index. After reading Maestro by Bob Woodward about Alan Greenspan, I not only knew that he was not taking the media frenzy into consideration, I tried to reach our President to warn him he could be held responsible for this global meltdown which was coming, but my phone calls were blocked and I was unable to get through..