IN THE SENATE OF THE UNITED STATES
March 31, 2022
Ms. Lummis (for herself, Ms. Sinema, Mr. Warner, and Mr. Hagerty) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To require the Securities and Exchange Commission to carry out a study of the costs associated with small- and medium-sized companies to undertake initial public offerings.
This Act may be cited as the
Middle Market IPO Underwriting Cost Act.
Study on IPO fees
In this section:
The term IPOs means initial public offerings.
Small- and medium-sized companies
The term small- and medium-sized companies means issuers with an initial public float determination of less than $700,000,000.
The Securities and Exchange Commission, in consultation with the Financial Industry Regulatory Authority, shall carry out a study of the costs associated with small- and medium-sized companies to undertake IPOs and Tier 2 offerings, as defined in section 230.251 of title 17, Code of Federal Regulations. In carrying out such study, the Commission shall—
consider the direct and indirect costs of an IPO, including—
fees, such as gross spreads paid to underwriters, IPO advisors, and other professionals;
compliance with Federal and State securities laws at the time of the IPO; and
such other IPO-related costs as the Commission determines appropriate;
compare and analyze the costs of an IPO with the costs of obtaining alternative sources of financing and of liquidity;
consider the impact of such costs on capital formation;
analyze the impact of these costs on the availability of public securities of small- and medium-sized companies to retail investors; and
analyze trends in IPOs over a time period the Commission determines is appropriate to analyze IPO pricing practices, considering—
the number of IPOs;
how costs for IPOs have evolved over time, including fees paid to underwriters, investment advisory firms, and other professions for services in connection with an IPO;
the number of brokers and dealers active in underwriting IPOs;
the different types of services that underwriters and related persons provide before and after a small- or medium-sized company IPO and the factors impacting underwriting costs;
changes in the costs and availability of investment research for small- and medium-sized companies; and
any other consideration the Commission considers necessary and appropriate.
Not later than the end of the 360-day period beginning on the date of the enactment of this Act, the Commission shall issue a report to Congress containing all findings and determinations made in carrying out the study required under subsection (b) and any administrative or legislative recommendations the Commission may have.