Question

In your own words, based on external research, tell us your opinion of "How effective is the U.S. Securities and Exchange Commission as a regulator of the IPO fund raising process?" Discuss and cite your sources.

Answer 1

Answer:

SEC- Security and exchange commission is independent agency of Federal Government that protects the right of investors by educating them regarding IPO, exchange and trading rules etc. IT facilitates information in capital markets and maintain fairly market practices.

Effectiveness of the U.S. Securities and Exchange Commission as a regulator of the IPO fund raising-

SEC's office of Investor Education and Advocacy issues the investor Bulletin to provide information regarding investing into Initial public offerings (IPOs). IPO is the process through which, company first time gets registered on the exchange. Company cannot sell the securities until SEC declares the registration statement "effective".

SEC takes care of the following points in IPO-

• Company's background and growth perspective.
• Company is fulfilling minimum capital criteria or not.
• SEC checks company's prospectus.
• SEC checks risk factor and dividend policy of company.
• SEC also considers the offer price of the company, that is coming up with IPO.