In a surprising twist from the ongoing government shutdown, the U.S. Securities and Exchange Commission (SEC) announced Thursday that companies can move forward with their initial public offerings (IPOs) using an obscure automatic approval process, now with the added option to skip pricing information altogether.
With 90% of SEC staff furloughed, startups can file their IPO paperwork and have it automatically take effect after 20 days. This rule has technically always existed, but few companies use it because they usually prefer an SEC review before going public.
However, the SEC clarified that during the shutdown, firms won’t face penalties for omitting pricing or other “price-dependent information,” making this workaround more appealing to companies eager to hit the market.
In essence, IPOs can now proceed with post-facto vetting, meaning investors could be buying shares before regulators have fully reviewed the filings, a move some experts say could expose investors to higher risk.
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Still, the SEC emphasized that companies remain legally liable for the accuracy of their disclosures and that the agency retains the power to demand amendments later if issues arise.
While this temporary shift could keep IPO activity alive during the shutdown, it also raises new questions about the balance between market access and investor protection.
