Page 158 - Initial Public Offering - An Introduction to IPO on Wall Street

8.4 Securities & Exchange Commission
In the finance sector, the Securities and Exchange Commission (SEC) is the most well-known
and feared regulatory body. The very name of the SEC may deter a small business from going
public, but it doesn't need to be that way.

To protect investors, the SEC was set up by Congress to control stock markets. For this reason,
the issuance of almost any type of security, including mail or internet-based issues, needs to be
registered with the SEC.

In an IPO, the process of submitting the necessary documentation to the SEC can be time-
consuming and challenging. Firstly, companies are required to file registration and then declare
it effective. Despite the imminent public recognition of the registration, the business is not
allowed to sell shares until the registration is declared effective.

Documents needed for registration include a prospectus that all investors need to be provided
with, as well as a segment that is readily accessible on the SEC website but is not made
available to investors. With the help of accounting professionals and attorneys, a business's
underwriter will prepare and file the required paperwork.

SEC provisions do not stop with the issue of shares for a business that has gone public through
an IPO. Ongoing disclosures must be provided on several subjects, including operational
information, key personnel and shareholders, large stock transactions, and the business's
general health.

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