In a disappointingly familiar (and entirely unsurprising) case of deja vu, SEC Chair Mary Jo White raised the specter of Wall Street taking advantage of greedy mom-and-pop investors once again. Having crashed 21% in the last three weeks alone, sudden weakness in recent IPOs raises questions about the issuance process, as Bloomberg reports, White warned investors that "you have to make sure you don’t have some very aggressive promoters taking advantage of that climate." As big investors mark-down their lofty valuations, it will be the average joe, pumped and dumped by CNBC and its ilk, that end up the biggest losers in this all too real show.
Slumping valuations for once-hot technology companies after they go public are drawing increased scrutiny from U.S. regulators. The Fed certainly helped the exuberance...
As Bloomberg reports,
Securities and Exchange Commission Chair Mary Jo White expressed concerns that some stock brokers may be painting too-rosy of a picture of private tech companies. Anytime there is a “significant” change in how much a company is worth after an initial public offering, it raises questions about the impact on investors who purchased unlisted shares, White said Tuesday.
“You have to make sure you don’t have some very aggressive promoters taking advantage of that climate,” she said in an interview after speaking at a securities conference in Coronado, California.
Investors “may get very excited from an article or a blog and invest their money,” White said at the Securities Regulation Institute. “You worry about them not getting sufficient or accurate information.”
Square Inc., which went public in November, is now valued at $3.2 billion. That’s significantly less than the $6 billion valuation the mobile-payments company achieved after a private financing round in 2014. Shares in file storage company Box Inc. have fallen 31 percent since it began trading last year, and online crafts marketplace Etsy Inc. has dropped 54 percent.
The SEC has separately been investigating whether brokers that help shareholders unload their stock in private companies may be violating federal laws.
In some instances, firms have designed derivatives that serve as the financial equivalent of hard-to-sell stock, a structure that may not comply with a Dodd-Frank Act restriction on selling equity-based swaps to individual investors.
Ironic then that Frank Quattrone - posterchild for IPo picth, investoir manipulatiuon during the last DotCom boom - just stepped down as CEO of his "boutique Silicon Valley" bank Qatalyst.
Of course - all this is just chatter and whether White will do anything about it - who knows!