Some U.S. companies are seeking to go public on Wall Street by taking advantage of a regulatory loophole. Here’s the rule that could rewrite the future of IPOs.
For weeks, the SEC offices have been deserted, the lights off, with monitors stuck on the last pending filings. And the US government shutdown, a consequence of the political stalemate in Congress, has also put the IPO market on hold. After years of apathy, companies had started returning to the IPO market, driven by easing interest rates and a U.S. economy once again showing resilience. But now everything has stopped.
Or almost. Because thanks to a little-known SEC provision, companies can go public without waiting for the SEC’s sign-off. And there’s already a startup ready to exploit this legal loophole.
Here’s what it’s all about.
The 20-Day rule: how it works and why it could reignite the IPO market
In the United States, no company can go public without SEC approval. But despite the rule, there are always exceptions. The "20-Day Rule" was created precisely for this reason: it allows companies to independently declare their registration statement effective, bypassing the federal agency, provided that the registration statement has been on file for at least twenty days before the effective date. In practice, companies assume full responsibility and proceed without SEC clearance.
During the 35-day shutdown of 2018, some companies attempted this approach: Gossamer Bio, New Fortress Energy, and several SPACs (the so-called blank-check companies) thus circumvented the bureaucratic paralysis.
Today, history seems to be repeating itself. MapLight is the first company in 2025 to attempt the experiment, and many observers believe others could follow suit, especially in biotech and other sectors where there is a strong demand for capital.
The difference is that this time, the context has radically changed. After years of high interest rates, the Fed has begun to loosen its grip, reviving investor appetite for new issues. Capital and investor confidence are in place, but an open door is needed. And if the SEC is closed, someone has decided to build one themselves.
The (very real) risks of this shortcut
Every shortcut has a price, and the "do-it-yourself" IPO is no exception. Without SEC oversight, companies that choose the 20-day rule operate in a regulatory gray area, where even a small mistake could turn into a legal problem. Furthermore, if prospectuses aren’t reviewed and financials aren’t audited by independent accountants, investors may grow more cautious. The risk, therefore, is that many funds and institutional investors will demand a discount on the offer price to offset the perceived increase in risk.
"Skipping SEC review exposes you to possible omissions or filing errors", explains Troy Hooper of Mergermarket. "It’s more unstable ground, which can leave both companies and investors vulnerable to post-listing volatility or disclosure issues".
It’s therefore not surprising that some companies have preferred to hit pause. Among these is the Unilever division that produces Magnum ice cream, which has decided to postpone everything.
The 20-day rule presents both opportunities and risks: on the one hand, it represents an emergency solution useful for keeping the IPO window open, but it could also lead to a wave of unvetted IPOs that could undermine confidence in the system.
What is certain is that if the shutdown were to continue, what today seems like an extreme option could become the norm.
Original article published on Money.it Italy 2025-10-21 16:20:30. Original title: Lo shutdown del governo USA mette in pausa le IPO. Ma questa disposizione cambia tutto
