FOLLOW US

As Washington’s budget standoff drags on, the U.S. Securities and Exchange Commission (SEC) has unveiled new guidance to keep America’s IPO pipeline from grinding to a halt. The regulator is offering an unprecedented workaround that allows companies to proceed with public listings even as nearly 90% of SEC staff remain furloughed.

The updated guidance, released Thursday, lets firms leave pricing details blank in their registration statements—giving them a rare chance to finalize prices later, once the agency reopens.

How the SEC’s New Strategy Works

Ordinarily, companies filing to go public include a “delaying amendment” in their registration documents. This legal mechanism pauses a filing’s automatic effectiveness after 20 days, ensuring SEC staff have time to review and comment. But with desks empty and emails unanswered during the shutdown, the usual process has stalled.

Under the new rules, firms can strip out that delaying amendment—allowing their registration statements to automatically become effective after 20 days without staff involvement. It’s a risky move that leaves companies vulnerable to mispricing or future enforcement actions once regulators return.

Still, Thursday’s guidance from the SEC’s Division of Corporation Finance softens the blow by permitting companies to use a price range instead of locking in a fixed IPO price—an adjustment industry lawyers are calling “significant and unprecedented.”

Lawyers Applaud the Rare Flexibility

“With this latest SEC guidance, companies can now move forward using a price range rather than a fixed figure,” said Ryan Adams, a public company advisory partner at Morrison Foerster LLP. “It’s a crucial lifeline for firms navigating this shutdown.”

A memo from Ropes & Gray LLP further explained that firms can amend pending filings or submit new registration statements minus the delaying amendment. However, they must still heed federal anti-fraud laws and account for any unresolved SEC comments.

SEC’s Intent: Keep the Market Moving

Freshfields LLP partners Erik Gerding, Melissa Hodgman, and Michael Levitt said in a Thursday blog post that the SEC “is clearly trying to keep IPOs flowing” despite the shutdown. “This could allow more companies to price and close offerings,” they wrote, especially those racing against the clock before financial data expires.

The Commission also provided a contingency plan for when government operations resume. Companies that previously dropped delaying amendments can request accelerated approvals—so long as they reintroduce the amendment before the 20-day window ends.

IPO Activity Trickles Despite the Freeze

Since the shutdown began on Oct. 1, few firms have managed to debut. Alliance Laundry Holdings raised $826.3 million in an upsized IPO just before the freeze, while Phoenix Education Partners secured $136 million in its Thursday offering.

Meanwhile, a handful of special purpose acquisition companies (SPACs) have launched, their $10-per-share model largely insulated from market volatility.

Still, as the federal shutdown continues, the SEC’s new flexibility could prove to be the thin lifeline keeping the IPO market’s pulse alive—if companies dare to take it.