An IPO occurs when shares of a company are sold to the general public on a securities exchange (typically NYSE or NASDAQ) for the first time. The company needs to file a registration statement with the SEC, which includes detailed and complex disclosure, high costs with hiring lawyers, accountants, investment bankers, etc. In addition, the company has to provide ongoing annual and quarterly reporting, and any material corporate events and changes in shareholdings of insiders. The company can be sued for any "material misstatements or omissions" in its filings.
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