Ding, dong, the IPO is dead? Although sung more often as a funeral dirge than a celebratory ditty, this refrain has echoed often over the past twenty years. But last year, something was different: U.S. exchanges experienced the largest increase in public listings since the late 1990s. While the hot stock market undoubtedly played a role in the uptick, alternatives to traditional initial public offerings (IPOs) have been making it easier for companies to take the plunge. As NYSE President Stacey Cunningham put it, for public listings, “[t]here’s been more innovation in the last two years than in the last two decades.”
Yet, as is often the case, this innovation has been the subject of scrutiny. On May 24, 2021, the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets is holding a hearing entitled, “Going Public: SPACs, Direct Listings, Public Offerings, and the Need for Investor Protections.” Plainly, the hearing’s title contemplates the need for more “investor protection,” also known as regulation. While investors should have accurate information about their investments, additional regulatory requirements can quickly do more harm than good, especially where investors benefit from more paths to public listing.
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