Making Fraud Great Again
New IPO proposals would remove MORE guardrails designed to protect investors.
Every day is a new day of not just another WTF, but… It’s all happening before our eyes.
Talk about red flag alerts!
This one, just as the monumental SpaceX IPO hits, takes the cake. Proposed as “the foundation” of SEC Chair Paul Atkins’s “agenda to Make IPOs Great Again,” this kowtowing to Wall Street – especially investment bankers, the Nasdaq, and the NYSE – strips away the very rules and regs designed to make it harder to deceive investors. My friend Michelle Leder, who writes the venerable footnoted.com, summarized it here on LinkedIn…
That prompted accounting gadfly Francine McKenna, who writes The Dig on Substack, to comment…
In other words, a layer of rules and regs designed to help avoid another Enron is being stripped away for 81% of all public companies. Eighty-one percent! Let that sink in…
Sidenote, for you kids: The SOX Francine is referring to is the Sarbanes-Oxley Act, which was designed to protect investors from corporate fraud… and which lays out the requirement for internal controls. It has been the bane of public companies and has been watered down over time. But this would be the coup de gráce.
The obvious reason this is being done is to make it less costly for companies to go and stay public, since fewer companies are. In addition to bankers and the exchanges, other winners would include corporate lawyers and VC firms, since this would give them an easier exit from private holdings via IPOs.
Heck, in a perverse way, it may very well be good news for anybody who flies red flags!
This, of course, comes on the heels of another current proposal to eliminate the requirement for quarterly financial disclosures.
I’ll let you all debate this among yourselves, but needless to say, less disclosure is never better.
And while all of this may help make IPOs great again, it will make fraud great again, too.
As always, interpret at will.
Agree? Disagree? Feel free to comment below.
DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) I have no investment of any kind in any company mentioned in this report.
I can be reached at herb@herbgreenberg.com.
Just like I previously mentioned, the entire market is a giant Enron! I have no idea how we are going to handle the crash when it comes. It’s going to make 2008 look like child’s play. (In my uneducated opinion anyway)
Herb, this administration will destroy faith in capital markets by the time they are done. This is a crazy proposal, so is the CFTC letting prediction markets self certify. Welcome to Griftville!!!