Government Shutdown Brings Unusual IPO Opportunity: SEC Allows Automatic Approvals Without Pricing

In a surprising twist caused by the ongoing government shutdown, the U.S. Securities and Exchange Commission (SEC) announced Thursday that companies can move forward with their initial public offerings (IPOs) through a little-used automatic approval system — now with the unexpected advantage of skipping pricing details entirely.

Here’s what’s happening: with around 90% of SEC staff currently furloughed, startups can file IPO documents and have them automatically take effect after 20 days. This process has always existed, but most firms avoid it since they typically prefer an SEC review before going public. During the shutdown, however, the SEC will not penalize companies for leaving out “price-dependent information,” making this alternative temporarily more attractive.

In essence, IPO vetting will still occur, but only after retail investors have already purchased shares — a move that raises concerns about transparency and investor protection. While the approach may help startups maintain momentum during the shutdown, it also shifts risk to the market, as regulatory oversight happens post-investment.

Companies remain legally responsible for the accuracy of their disclosures, and the SEC can later require corrections or amendments once normal operations resume.

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