SEC's Direct Listings Expansion Could Invite New Risks

By Tom Zanki (January 8, 2021, 6:40 PM EST) -- The U.S. Securities and Exchange Commission's recent expansion of direct listings to allow the raising of capital will likely spur more companies to explore these alternatives to traditional initial public offerings, although such listings also pose certain risks that could limit their appeal.

New York Stock Exchange companies can now sell shares concurrent with a direct listing following a regulatory green light on Dec. 22, and Nasdaq has a similar proposal pending. The SEC's approval effectively broadened the utility of these transactions, which until now have only been used by select companies that didn't need new funding at the time of...

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