JOBS Act not helping IPO process

People often decry regulation as counterproductive the majority of the time.

This holds true even for new regulations that have the best of intentions, that affirmatively try to break through logjams and make things easier for companies. I've noted over FierceFinance that the Jumpstart Our Business (JOBS) Act, which was aimed at aiding companies seeking a public listing, has been received rather tepidly by Wall Street banks and the emerging growth companies the law sought to help.

Now comes a recent BDO USA survey that found that less than a third of investment bankers think that the JOBS Act has led to more IPOs.There have been lots of reasons for would-be public companies to take a cautious approach. Hopefully, those conditions will change this year, and more companies will take the IPO plunge. But even then, I would be surprised if bankers took full advantage of what the Act tried so hard to deliver.

A good example is the provision that allows underwriters to release research about the stock earlier in the process. As of now, given the thicket of other rules, the provision remains little used. In some cases, the law may actually backfire. Eighty percent of the bankers surveyed said that the new secret filing process, which might be used to test the IPO waters, amounted to a lack of transparency that actually inhibited the ability of bankers to "advise clients on their offerings due to a lack of information on potential competitors for investment dollars."

All in all, this amounts to another prime example of the law of unintended consequences.

For more:
- here's the survey
- here's an item from Compliance Week

Related articles:
JOBS Act and IPOs, Part II
JOBS Act: benefit or bane to emerging companies