NEW YORK/WASHINGTON — The U.S. Securities and Exchange Commission risks weakening investor protections if it allows companies to raise money in the public market through a direct listing without the support of underwriting banks, an influential broker group said on Friday. The warning by the American Securities Association (ASA), a Washington-based group representing regional financial firms, highlights brewing tensions between the stock exchanges that are pushing for direct listings and financial firms that stand to see their fees cut in the capital-raising process. The New York Stock Exchange (NYSE) has filed an application with the SEC to allow companies going public to raise capital through a direct listing, instead of an initial public offering. Nasdaq has said it also intends to file changes to its rules that would allow companies to raise funds, so-called primary capital, through a direct listing. Currently, a direct listing does not involve the selling of any new shares and prices the newly public shares on the day they start trading, without the company having to hire investment banks to underwrite the transaction as with a traditional initial public offering.

Source: New York Times December 13, 2019 12:00 UTC