{"id":1953,"date":"2013-09-24T18:15:48","date_gmt":"2013-09-24T18:15:48","guid":{"rendered":"http:\/\/ncjolt.org\/?p=1953"},"modified":"2020-06-04T20:54:00","modified_gmt":"2020-06-04T20:54:00","slug":"twitter-ipo-and-the-jobs-act-shhh","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/twitter-ipo-and-the-jobs-act-shhh\/","title":{"rendered":"Twitter IPO and the JOBS Act #Shhh"},"content":{"rendered":"

Tuesday, September 24, 2013, by Tony Lucas
\nIn a tweet<\/a>, nearly two weeks ago, Twitter announced publicly that it had confidentially submitted IPO registration documents with the Securities and Exchange C<\/a>ommission (SEC).\u00a0 The tweet reignited a debate over the Jumpstart Our Business Startups (JOBS) Act<\/a>, signed by the President Obama last April.\u00a0 However, Twitter is not the first company to publicly announce it has submitted registration documents with the SEC.\u00a0 In fact, 10 percent<\/a> of confidential submissions have been publicly announced.
\nThe goal<\/a> of the JOBS Act is to increase funding for startups by relaxing securities regulations.\u00a0 The JOBS Act allows a company with under $1 billion in revenues to submit registration statements and amendments to the SEC without revealing anything to the public until 21 days before a roadshow to investors.\u00a0 Twitter meets the revenue requirement with estimated revenues for 2013 of $600 million.\u00a0 Furthermore, the JOBS Act allows companies to \u201ctest the waters\u201d to determine demand for the stock.\u00a0 In the first year of the JOBS Act, 63 percent<\/a> of eligible companies utilized this confidential review provision.
\nOne argument against the confidential review provision is that it keeps the public in the dark about the SEC\u2019s focus during the agency\u2019s review and revision of a company\u2019s submitted financial information.\u00a0 These reviews alert potential investors about problems at companies.\u00a0 This was the case for Groupon<\/a>, concerning its accounting practices, and Facebook<\/a>, regarding its mobile advertising negatively affecting its revenue, before both companies IPOs.\u00a0 However, the counterargument<\/a> is that Twitter is not keeping the public in the dark because it is required to file its confidential registration documents when it files its S-1 documents.\u00a0 So the public will be able to review the documents and their revisions.<\/p>\n

In a tweet<\/a>, nearly two weeks ago, Twitter announced publicly that it had confidentially submitted IPO registration documents with the Securities and Exchange C<\/a>ommission (SEC).\u00a0 The tweet reignited a debate over the Jumpstart Our Business Startups (JOBS) Act<\/a>, signed by the President Obama last April.<\/p><\/blockquote>\n

It remains to be seen whether Twitter will take advantage of any of the other provisions of the JOBS Act such as the provision allowing it to disclose only two, rather than three, years of audited financial statements.
\nYesterday, another rule change from the JOBS Act took effect\u2014the lifting of the SEC\u2019s ban on general solicitation.\u00a0 This change essentially allows companies to ask for funding in public, rather than behind closed doors.\u00a0 The ban was implemented after the stock market crash of 1929.\u00a0 So companies are now able to solicit accredited investors<\/a> publicly.\u00a0 Despite this rule change, the average person is not currently able to invest in startups (only the 8.5 million people<\/a> qualified as accredited investors).\u00a0 This will change in the upcoming year as the next provision of the JOBS Act will be implemented\u2014equity-based crowdfunding<\/a>.\u00a0 Some<\/a> have compared this provision to Kickstarter<\/a>, but instead of receiving mementos, investors receive stock.\u00a0 It is likely that general solicitation by companies looking for investors will not utilize Twitter or other social media sites to their full potential until the equity-based crowdfunding provision is implemented.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

Tuesday, September 24, 2013, by Tony Lucas In a tweet, nearly two weeks ago, Twitter announced publicly that it had confidentially submitted IPO registration documents with the Securities and Exchange Commission (SEC).\u00a0 The tweet reignited a debate over the Jumpstart Our Business Startups (JOBS) Act, signed by the President Obama last April.\u00a0 However, Twitter is …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/1953"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=1953"}],"version-history":[{"count":1,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/1953\/revisions"}],"predecessor-version":[{"id":7578,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/1953\/revisions\/7578"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=1953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=1953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=1953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}