SEC Expands ‘Test-the-Waters’ Accommodation
The Securities and Exchange Commission (SEC) has expanded its rules permitting companies to ‘test-the-waters,’ or gauge market interest, by reaching out to certain investors before a registered public offering.
The SEC adopted a new Rule 163B to permit all issuers to engage in oral or written communications with certain qualified investors either prior to or following the filing of a registration statement. The new rule provides companies with more flexibility in consulting with investors to evaluate market interest for a potential registered securities offering. Previously, only emerging growth companies were permitted to engage in these activities.
Nasdaq has advocated for this measure as part of its blueprint to revitalize the U.S. capital markets and issued a comment letter supporting the SEC’s proposal. Nasdaq believes the SEC has taken another important step toward modernizing markets.
View Nasdaq's comment letter here>
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