IPOs and the Slow Death of Section 5

Since its enactment, Section 5 of the Securities Act of 1933 has restricted sales-based communications with investors, but that effort is nearly dead even with respect to the most sensitive of offerings, the IPO. Our paper traces that devolution, which began almost as soon as the ’33 Act came into existence, though the SEC’s 2005 deregulatory reforms and Congress’ intervention in the JOBS Act of 2012. We show how much of this related to an embrace of “book-building” as the industry’s preferred method of price discovery, which requires private two-way communications between underwriters and potential sophisticated investors. But book-building (and the predictable IPO underpricing that results) has a retail dimension as well, and we point to ways in which the otherwise sensible deregulation may enable an over-stimulation of retail investor demand. We then explore two main justifications that have been given for the aggressive deregulation. The first is that any loss in prophylactic protection can be made up for by the threat of liability, particularly with an enhanced Section 12(a)(2). We find this unpersuasive for a variety of reasons. The other—amply visible in the long history of Section 5—is a faith in the “filtration” process, that retail investors gain protection because of the availability of the preliminary prospectus during the waiting period, to those involved in the selling process if not the investors themselves. Putting aside the biased incentives that affect filtration, much of what is most important—and conveyed privately to the institutions in the course of book-building—is forward-looking information that probably need not appear in the formal disclosure, whether preliminary or final. None of this is an argument for returning to the old prophylactics of Section 5. But it is cause for the SEC and FINRA to pay close attention to the retail investor effects of the IPO selling practices, especially in the post-JOBS Act era

“Publicness” in Contemporary Securities Regulation after the JOBS Act

The JOBS Act of 2012 reflects the largest deregulatory change to the Securities Exchange Act of 1934 over its more than 75 year history. It contracts the coverage of those companies subject to the obligations of ‘publicness” and it introduces an “on ramp” that will permit most newly-public companies to meet a lesser set of disclosure, internal control and governance obligations for up to five years. We set these changes against a larger discussion of when a private enterprise should be forced to take on public status in securities regulation, a topic that has been entirely under theorized. We conclude that the change from 500 to 2000 shareholders of record made by the JOBS Act, while entirely clear in its deregulatory thrust, misses a key point: “record” ownership is an antiquated metric for any measuring of publicness and Congress needs to find a better one, such as public trading. More broadly, we observe that Congress increasingly has defined public obligations in securities regulation less by the traditional touchstone of investor protection and more by ways that our largest companies affect constituencies beyond their investor base. Our boundary-setting thus should include two tiers of public companies with the smaller tier limited to core disclosure and governance obligations. Finally, our review of these boundary questions reveals a larger pattern that ought to inform how we understand securities regulation. Entrepreneurs and their advisors regularly occupy new unregulated space created in the wake of technological change or by gaps in regulation revealed as markets evolve. Government response, seemingly inevitably, is piecemeal and reactive. The result is a regulatory process that is more informal than administrative law theory usually suggests and more opaque than we might want in contemplating regulatory change

The solubility and oxidation state of nickel in silicate melt at low oxygen fugacities: Results using a mechanically assisted equilibration technique

The solubility of Ni in a silicate melt has been measured using a new, mechanically assisted equilibration technique over a wide range of controlled ƒO2 values. The melt composition corresponds to the 1 atm eutectic in the system CaAl2Si2O8-CaMgSi2O6 + 10 wt% CaO. The experiments were performed at 1300°C and over an ƒO2 range of 10−8.5 to 10−13.75, and over a temperature range of 1270 to 1390°C at a constant gas mixing ratio ( ). The experiment consists of a sample of melt contained within a crucible of Ni metal and held in a 1 atm gas mixing furnace. A Ni spindle is entered into the sample from above and continuously rotated at a constant angular velocity using a viscometer head. The stirring of the sample serves to accelerate the approach to equilibrium between the liquid sample and the metal crucible (and spindle). This arrangement allows relatively rapid equilibration of Ni content following changes to higher or lower ƒO2 values. Samples of the melt may be taken at any time for analysis and thus the equilibrium solubility of Ni in the silicate melt may be determined from unambiguous experimental reversals. The Ni contents of samples, analysed both by INAA and by ICP-AES, range from 25 to 5300 ppm. The data presented in this paper indicate that the oxidation state of Ni in the investigated melt is Ni2+ over the entire range of ƒO2 investigated. This conclusion contrasts with recent reports in the literature of an inflection in the ƒO2 dependence of Ni solubility, which has been interpreted as solution of neutral Ni at low ƒO2 (Morse et al., 1991; Colson, 1992; Ehlers et al., 1992). We also present data for the temperature dependence of Ni solubility in the investigated melt. The solubility decreases with increasing temperature at constant ƒO2. The present results are in good agreement with the metal-loop-equilibration experiments reported by Holzheid et al. (1994)

Test results at transonic speeds on a contoured over-the-wing propfan model

A semispan wing/body model with a powered highly loaded propeller has been tested to provide data on the propulsion installation drag of advanced propfan-powered aircraft. The model had a supercritical wing with a contoured over-the-wing nacelle. It was tested in the Ames Research Center's (ARC) 14-foot Transonic Wind Tunnel at a total pressure of 1 atm. The test was conducted at angles of attack from -0.5 to 4 deg at Mach numbers ranging from 0.6 to 0.8. The test objectives were to determine propeller performance, exhaust jet effects, propeller slipstream interference drag, and total powerplant installation drag. Test results indicated a total powerplant installation drag of 82 counts (0.0082) at a Mach number of 0.8 and a lift coefficient of 0.5, which is approximately 29 percent of a typical airplane cruise drag

Cocaine self-administration in the mouse: A low-cost, chronic catheter preparation

Intravenous drug self-administration is the most valid animal model of human addiction because it allows volitional titration of the drug in the blood based on an individual’s motivational state together with the pharmacokinetic properties of the drug. Here we describe a reliable low-cost mouse self-administration catheter assembly and protocol that that can be used to assess a variety of drugs of abuse with a variety of protocols. We describe a method for intravenous catheter fabrication that allows for efficient and long-lasting intravenous drug delivery. The intravenous catheters remained intact and patent for several weeks allowing us to establish stable maintenance of cocaine acquisition. This was followed by a dose response study in the same mice. For collaborators interested in premade catheters for research please make a request at www.neuro-cloud.net/nature-precedings/pomerenze

The Binary Black Hole Model for Mrk 231 Bites the Dust

Mrk 231 is a nearby quasar with an unusually red near-UV-to-optical continuum, generally explained as heavy reddening by dust (e.g., Leighly et al. 2014). Yan et al. 2015 proposed that Mrk~231 is a milli-parsec black-hole binary with little intrinsic reddening. We show that if the observed FUV continuum is intrinsic, as assumed by Yan et al. 2015, it fails by a factor of about 100 in powering the observed strength of the near-infrared emission lines, and the thermal near and mid-infrared continuum. In contrast, the line and continuum strengths are typical for a reddened AGN spectral energy distribution. We find that the HeI*/Pbeta ratio is sensitive to the spectral energy distribution for a one-zone model. If this sensitivity is maintained in general broad-line region models, then this ratio may prove a useful diagnostic for heavily reddened quasars. Analysis of archival HST STIS and FOC data revealed evidence that the far-UV continuum emission is resolved on size scales of ~40 parsecs. The lack of broad absorption lines in the far-UV continuum might be explained if it were not coincident with the central engine. One possibility is that it is the central engine continuum reflected from the receding wind on the far side of the quasar.Comment: Consistent with the accepted ApJ pape