Shut down silver lining? The IPO review comes after investors buy in

In a development born of the government shutdown, the Securities and Exchange Commission (SEC). announced Thursday That companies can proceed with IPOs using an arcane automated approval process, now with the added benefit of skipping pricing information entirely.

What happens is that with 90% of the SEC staff furloughed, startups can file their paperwork and it automatically becomes effective after 20 days. This option has always been there; Companies rarely use it because they prefer to have SEC auditors review their disclosures before they go public. The difference here is that the SEC will not penalize companies for omitting pricing or “price-based information” during the close, making this workaround more plausible.

In other words, there’s still scrutiny, the kind that happens after retail investors have actually bought a company’s shares, which is what it sounds like. . . Not great, but we might be surprised to learn that investor protection works best after the money has moved on.

Companies remain legally responsible for their disclosures, and the SEC can later require amendments.