Come on in, the water’s fine: SEC’s latest proposal widely welcomed

Author: John Crabb | Published: 5 Mar 2019

The Securities and Exchange Commission’s (SEC) decision to expand the section of the JOBS Act that allows companies to gauge interest in potential stock offerings to include all companies, regardless of size or revenue, has been widely welcomed by the industry.

Allowing investor input at an earlier stage has no obvious downsides, sources suggest, and is likely to lead to more successful initial public offerings, fewer failures, and more efficient capital raisings.

"Making the 'test-the-waters’ communications available to a broader group of capital raisers really has no downside," said Brian Rosenzweig, partner at Covington

"Increased knowledge on the part of issuers is a good thing, and increased visibility of investor demand into potential challenges to a capital raise is a positive," he said. "The net outcome ought to be, as we have seen with emerging growth companies (EGCs): fewer failed offerings, more successful offerings, and more efficient capital...