Regulating the PIPE Market: The Unintended Ripple Effects

by Claire Sheppard April 24 2012, 19:40
This week, the authors of SEC Enforcement in the PIPE Market: Actions and Consequences are presenting their paper at the CFA-FAJ-Schulich Conference on Fraud, Ethics and Regulation. Their work discusses the SEC’s early 2000s reforms affecting the PIPE (private investment in public equity) market. The SEC intended these reforms to “reduce the opportunities for investor stock price manipulation.” This article contends (and the paper hints) that the SEC’s efforts to crack down on this price manipulation not only had unintended deleterious effects on the PIPEs market but also had little impact on the intended target of the reforms—investor exploitation of companies seeking PIPE capital. [More]

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