NYSE Direct Listings Hit Snag as Investor Group Raises Concerns

The New York Stock Exchange’s plan to let companies raise capital through direct listings is on pause after an influential group of institutional investors took an unusual regulatory step in a last-ditch effort to block it.
The Council of Institutional Investors, which was behind the maneuver, raised concern that the NYSE’s plan would let companies circumvent protections built into the initial public offering process, ultimately harming investors.
The council filed a notice with the Securities and Exchange Commission on Monday that it would petition for a review of the plan by the SEC’s commissioners. The SEC’s staff approved the plan last week, opening the door to a new, cheaper alternative to the IPO for companies seeking to go public.
But the council’s maneuver has at least temporarily closed the door again. The SEC notified the NYSE in a letter posted on the agency’s website that its approval of the NYSE’s plan had been stayed until further notice.
The council must submit its petition in the coming days. The SEC’s rules don’t spell out how long the SEC’s commissioners have to review the petition, but similar reviews in the past have dragged on for months. Potentially the commissioners could reverse last week’s decision and prevent companies from using the new type of direct listing to go public on the NYSE.


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