Twitter filed for an initial public offering: we know this because the company tweeted so, not because the registration documents, or the company’s financial disclosures, are publicly available. Twitter didn’t even have to tweet what it did: its not legally required to say that it has filed registration documents with the SEC (it did that voluntarily).
When did the process of filling IPO documents become confidential?
Here’s how the JOBS Act alters the IPO process:
Its changes only apply to companies with less than $1 billion in annual revenue. Anything more, and the standard IPO process applies: registration documents, including a prospectus and financial details like revenue and profit, are public as soon they are filed with the SEC; and amended with increasing detail as the company gets closer to selling its shares.
These companies (referred by the law as emerging growth companies) are allowed to file their IPO registration documents confidentially with the SEC.
The registration documents are required to be made publicly available 3 weeks before the company starts meeting with potential investors to explain and sell its offering.
The key point is that the filings are confidential, until they are not. After they are submitted, the SEC reviews them (yes, confidentially), and can request changes to make the company’s filings, as Matt Levine points out, not misleading. Then, the documents must be must be released three weeks before the company starts its talking to investors. That gives investors, journalists, and other assorted, curious onlookers a month to read a set of legal and financial documents.
Is it a secret IPO?
No. Twitter is not, as All Things D, the Atlantic, CNN, Business Insider, the Huffington Post, Quartz, Valleywag, and the Verge described it, in the process of executing a secret IPO. It’s a temporarily confidential filing process.
Groupon’s founder and former CEO Andrew Mason offered his thoughts on the benefits of this new, different, and now, perfectly legal process:
Confidential S1s? But what could be wrong with releasing 100s of pages of new financial and strategic co. info to the Internet while gagged?
— Andrew Mason (@andrewmason) September 13, 2013
How is the SEC going figure out proper accounting treatment without the help of Techcrunch guest bloggers? — Andrew Mason (@andrewmason) September 13, 2013