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Yesterday, by another 3-2 vote, the SEC approved changes to NYSE listing rules relating to primary direct listings after conducting a “de novo” review following objections raised by certain investors and commentators.
In August, using delegated authority, the SEC’s Division of Trading and Markets had approved changes to NYSE listing rules to allow companies to raise capital in connection with a direct listing on the NYSE without a firm commitment offering. Shortly afterwards, the SEC notified the NYSE that the rule changes had been stayed following receipt of notice from the Council of Institutional Investors (CII) that the CII was submitting a petition for a full Commission review of the delegated approval by the Division.
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On December 22, 2020, the U.S. Securities and Exchange Commission (SEC) approved the proposed rule change filed by the New York Stock Exchange (NYSE) allowing companies to sell new shares and raise capital in direct listings.
This approval comes several months after the SEC s initial approval of the rule change, which was stayed following the submission of a notice of intention to petition for review by the Council of Institutional Investors (CII). Following a de novo review of the proposed rule change, as well as review of the briefs, motions, and statements submitted, the SEC issued a finding that the NYSE proposed rule change is consistent with the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, and approved the proposed rule change. This approval opens the door to another pathway for companies to offer and sell their shares in the public markets.
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Silicon Valley investor Bill Gurley told CNBC Tuesday that the change in direct listings approved by the United States Securities and Exchange Commission on Tuesday will unquestionably lead to the demise of traditional initial public offerings.
What Happened: Appearing on CNBC’s “Closing Bell” program, the general partner at Benchmark hailed the SEC move on direct listings and said it was a dawn of a superior alternative to the traditional IPOs, which he termed “archaic.”
The investor said the legacy IPO process has “resulted in massive one-day wealth transfers straight from founders, employees and investors to the buy side.”
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On December 22, 2020, the Securities and Exchange Commission (the “SEC”) approved the proposal submitted by the New York Stock Exchange (“NYSE”) that allows companies to conduct concurrent primary offerings as part of a direct listing on the exchange. The NYSE’s proposal had been put on hold since August, following the SEC’s receipt of a notice of intention to petition for review submitted by the Council of Institutional Investors. As a result of the approval, a company undertaking a direct listing on the NYSE may issue new shares and sell these to the public on its first trading day without conducting a firm commitment underwritten offering. Previously, private companies that chose to undertake a direct listing on the NYSE undertook the listing together with registering with the SEC the resale of shares by their existing shareholders. The NYSE will deem a company to have met the applicable aggregate ma
SEC Backs NYSE Plan for Non-Traditional IPOs cfo.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from cfo.com Daily Mail and Mail on Sunday newspapers.