 | SEC plans to tighten rules on pre-IPO placement
02 September, 2010
Securities and Exchange Commission (SEC) plans to tighten rules on pre-IPO placement to prevent making of windfall profit through trading on such shares by the beneficiaries.
The SEC is seeking to introduce a specific guideline, under which a company intending to go public will not be allowed to sell pre-IPO private placement to not more than 50 institutions or individuals.
If the said limit exceeds, the pre-IPO placement or capital raised before IPO will be treated as public offering.
Currently, there is no bar on the number of individuals or institutions chosen for private placement.
Pre-IPO placement is a portion of an IPO placed with private investors before the IPO is scheduled to hit the market.
The price paid for shares in a pre-IPO placement is usually less than the prospective IPO price. But there is a lock-in period for one year for these investors.
Release link:http://www.thefinancialexpress-bd.com/more.php?news_id=110958&date=2010-09-02
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