SEC Relaxes Rules for IPO Prep Amid Government Shutdown
American regulators are making it easier for companies to go public during the government shutdown.
The last time there was a government shutdown, in October 2023, companies scrambled to get their initial public offerings (IPOs) off the ground.
Businesses are typically blocked from listing on Wall Street during a shutdown, as Congress hasn’t approved funding that would allow regulators to approve their IPO plans.
Still, businesses can allow their statements to become effective automatically, which involves determining their IPO pricing 20 days before going public rather than finalizing it the night before following a review by the Securities and Exchange Commission (SEC).
In an announcement posted to its website Thursday (Oct. 9), the Wall Street regulator said that because officials were not able to go over registration statements, the SEC would not look to penalize companies that left out pricing information from prospectuses filed during the shutdown and then list either during or after the shutdown.
The SEC’s change was flagged in a report by Reuters, which also noted a client alert from law firm Davis Polk which said the change had occurred in the wake of “discussions” the firm and others had held with the commission.
The change comes as the IPO market for the FinTech space “has roared back to life in 2025 after several quiet years,” as PYMNTS wrote last week.
However, that report said, there is not the same speculative surge present that was the hallmark of the last cycle. Early offerings from Klarna, Figure Technology Solutions, Circle and Chime have largely been received with optimism and double-digit increases from their offering prices, amid a sea change for these companies’ business models.
Before this year, “I think most people were looking at FinTechs as firms that were trying to grow as quickly as possible to try to get as large a population” of customers in place as possible, Edward Best, co-chair of the capital markets practice at Willkie Farr & Gallagher, said in an interview with PYMNTS. “They were chasing numbers, and many of them were unprofitable for a number of years.”
He added that this year’s listings and the investor response reflect a fundamentally different environment, with an “overall market” that “is certainly much more mature.”
Investors are focused on profitability and business plans that stress a rational approach to their respective markets, where, as Best put it, “We want to see growth, but we’d like to see it be sustainable.”
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