Jul. 1, 2020
I believe this rule is for the sole benefit of the private investor and NYSE. I've spoken to multiple securities attorney's and they all said the same thing, that their biggest concern with a Direct Listing is it's fraudulent with no liability (Slack for example). How could the SEC pass an amendment like this when fraud is a factor. The private investors may have to wait a little longer to cash out due to the lockup (for Traditional IPO's) but when they do, they are earning 1,000% on their investment. With a Direct Listing, they'll be selling their stock for that return and showing no support for the company they invested in. A primary capital raise will have so many red flags around it. How could we trust the private companies accounting methods when they aren't up to code with the public markets. WeWork is a perfect example of this. There would have been hundreds of lawsuits against the company because they used an accounting method only used in the private markets, community accounting. I still don't understand that. Instead of having a VC tell the public markets what they need to change, shouldn't the SEC be looking out how to change the private markets? For one, there are only a handful of VC's that dominate that landscape. A Benchmark GP stated that 7 of their last 9 investments were the first capital/investment that a startup raised. How could that monopoly continue while also giving them the added benefit to be the first to cash out during an Direct Listing. Direct Listings is not a new alternative. It has been around forever. Amendment No. 2 is not consistent with the act and could halt the flow of money into our banks and capital markets. Also - how would a down round work on a direct listing? The retail investor wouldn't even know that the company should be priced below its current valuation. If this amendment passes, you're going to screw a lot of people