Adam Creighton: Let's break open the door to the closed-shop IPO
Posted by OnMarket 09 June 2018 @ 12:00am
IPO stands for Initial public offering. We have heard the question many times before: “Why do they use the term public when it plainly isn’t?”
Hundreds of OnMarket members have emailed the Financial Services Royal Commission to seek an inquiry into the lockout of retail investors from IPOs. Why are IPOs pre-sold to selected institutions, before lodgement, before retail investors are legally eligible to participate? Ironically, the law requires the prospectus to be drafted to a standard for retail investors, yet retail investors have no rights to apply for shares. This results in the paradox of retail investors only being offered smaller, riskier IPOs, while being blocked out of larger IPOs.
We know that the murky world of who is allocated shares in floats does not meet public expectations. But, the Royal Commission’s terms of reference is set by reference to ‘conduct not meeting public expectations’. They need to hear it from the public, the people affected, to act on it. A short 3 sentence email will suffice.
Simply email the Financial Services Royal Commission: fsrcenquiries@royalcommission.gov.au
How this plays out is up to whether you take 3 minutes to send that email. Here is the opinion of Adam Creighton, Economics Editor of The Australian. Judge for yourself.