Facebook might not have to disclose its finances to the public next April — if the Securities and Exchange Commission raises the maximum number of shareholders for nondisclosing companies.
SEC Chairwoman Mary Schapiro (pictured) recently sent a letter to lawmakers based on a recent probe of private market trading in the shares of Facebook and other companies, according to The Wall Street Journal.
The proposal suggests that getting rid of certain disclosure requirements might motivate more companies to have initial public offerings, potentially resuscitating the IPO market, which simply hasn’t kept up with the rest of the economy’s rebound from the last recession.
The SEC has also suggested giving companies more flexibility in how they raise money: By allowing companies with more than 499 shareholders to keep certain financial details to themselves, firms could also opt to issue more shares privately.
This latter suggestion obviously seems like something that might keep the IPO market from reviving. Initial offerings haven’t rebounded from the most recent recession at the same rate as the rest of the economy. Chinese companies account for a larger share of IPOs than U.S. issuers — and this year’s forthcoming IPOs include three social networks based in China.
U.S. companies going public have dropped to only 130 per year from an average of 503 during the 1990s, according to The Wall Street Journal.
Readers, do you think Facebook might sell more shares privately if the the SEC’s suggestions become laws?