Washington, June 22 (ANI): American regulators should overhaul rules governing how various firms go public in the wake of social networking giant Facebook's botched multi-billion dollar flotation, a powerful Congressional committee has said.
Darrell Issa, the Republican head of the House Oversight Committee, said the Securities and Exchange Commission (SEC) needs to 'take a deeper look into this regulatory matter.'
"The Facebook IPO has taught us that, at a minimum, the IPO process suffers substantial flaws," The Telegraph quoted Issa, as saying.
Issa, in a 12-page latter to SEC Chairman Mary Schapiro, questioned whether ordinary investors are protected against 'conflicts of interest' in the way that a company's shares are priced during a flotation.
"Those banks underwriting an IPO can set the price while subject to conflicts of interest stemming from the economic relationship with those institutional clients that will ultimately purchase the bulk of an issuance," he wrote.
According to the paper, the letter also asks the SEC to consider whether the rules governing what can be disclosed during the IPO process, and how, need updating.
Facebook's much-hyped 104 billion dollars flotation on May 18 was beset by problems that started with a technical glitch that delayed the start of trading of shares on the Nasdaq exchange.
Facebook and the banks advising it were then accused of selectively disclosing the news that the outlook for the company's profits this year was worsening. (ANI)