According to the Wall Street Journal on Monday, after the listing of issuers such as cryptocurrency company Longfin Corp., the traditional exchange postponed the RegA+ exempted IPO (initial public offering).
In early June, the US Securities and Exchange Commission (SEC) filed a fraud allegation against Longfin. The SEC claims that 90% of Longfin's revenue is forged, and the company sold more than 400,000 unfunded Longfin shares to secure its listing on Nasdaq.
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According to reports, the indictment also pointed out that the SEC approved Longfin's Reg A+ exemption. The SEC believes that the company is mainly managed and operated in the United States. In fact, the company's operations, assets and management are actually carried out overseas.
Now Nasdaq and the New York Stock Exchange (NYSE) are avoiding the use of Reg A+ exempted company stocks. The Reg A+ exemption allows companies to have lower accounting and disclosure standards than traditional listed companies. Compared with traditional IPOs, Reg A+ exemptions have advantages in terms of financing efficiency, time and cost, and are very suitable for small and medium-sized enterprises with small capital (less than 50 million US dollars), which is equivalent to a small IPO.
In addition, Nasdaq has submitted a proposal to the SEC requesting that the rules be amended – unless the listed company's business hours are greater than two years, it may not be listed on the Nasdaq in the form of Reg A+.
David Feldman, a partner at the law firm Duane Morris LLP, said a New York Stock Exchange executive told him earlier this year that the NYSE was not interested in the Reg A+ corporate stock.
A Nasdaq spokesperson revealed:
“We have been studying the listing standards of all companies. We believe it is necessary to strengthen the rules in this area and fulfill our commitment to protect investors.”
The Wall Street Journal pointed out in the article that from 2015 to 2018, a total of 157 funds were raised through the Reg A+ exemption rule, and the amount obtained was about $1.5 billion, and only a small part of these transactions were conducted on the exchange. .
In April of this year, the decentralized computing network Blockstack filed an application with the SEC to conduct a $50 million token sale under the Reg A+ framework. If approved, the offering will involve sales of 295 million stack tokens.
In the same month, the SEC issued a “Framework Analysis of Digital Assets Investment Contracts” to help market participants determine whether digital assets are considered investment contracts and are therefore considered a type of security.