- In an interview with Business Insider, the president of the Nasdaq Stock Exchange has warned that the US government’s record-breaking shutdown is crippling the market for initial public offerings.
- Speaking at the World Economic Forum in Davos, Switzerland, Nelson Griggs said the shutdown had kept the Securities and Exchange Commission from processing the paperwork required for companies looking to go public.
- “We’d like to see a resolution here obviously as quickly as possible because it is impacting not just to a small degree Nasdaq but to a large degree the companies that are trying to go public,” he said.
- Follow all of Business Insider’s coverage from Davos here.
The president of the Nasdaq Stock Exchange has warned that the US government’s record-breaking shutdown is crippling the market for initial public offerings and in turn causing a huge backlog of companies waiting to list publicly.
Speaking at this week’s World Economic Forum in Davos, Switzerland,Nelson Griggs told Business Insider that the partial federal government shutdown had kept the Securities and Exchanges Commission from processing the paperwork required for companies to go public.
“We’d like to see a resolution here obviously as quickly as possible because it is impacting not just to a small degree Nasdaq but to a large degree the companies that are trying to go public,” Griggs, who is also the exchange’s executive vice president for corporate services, said on the sidelines of the annual conference of the global elite.
Many firms looking to go public toward the end of last year delayed their listings because of the huge volatility that plagued financial markets, opting instead to go public early this year. They now face an uncertain path because of the shutdown. In all, Griggs said he knew of more than 90 companies that had filed an S1, the key filing required to list publicly, and were awaiting approval.
“If a company has not gone down the path very very far with the SEC, there’s nothing we can do whatsoever,” he said.
The Wall Street Journal reported earlier this week that some firms were looking to use a little-known workaround to list even during the shutdown. According to The Journal, this involves “changing language in an IPO filing to make it automatically effective after 20 days.”
Doing so is legal, and The Journal said the SEC actually reminded firms that they could take advantage of the process. Two companies, Gossamer Bio Inc. and TCR2 Therapeutics Inc., have explored doing so.
“If they have gone down the path very very far, we think the SEC’s done their work and it’s really up to us to do ours – there is a unique path to go public, but it’s something that no one’s ever done before,” Griggs told Business Insider.
When the shutdown does end, Griggs said, there is likely to be a substantial backlog of IPOs to clear, a process that will not be immediate.
“It’s not just, you know, this opens up and you flip a switch,” he said. “There’s going to be a very large backlog. You have an impact where companies do their filings and projections based off of a quarterly number … Those numbers have become stale.
“So what you basically have is the likelihood that there is a fairly significant pushback even if the SEC open up tomorrow.”
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