“An increasing number of companies are taking advantage of regulatory changes that were approved last year to make initial public offerings simpler and less expensive, but investor advocates say some of those practices come at the expense of transparency.
“The provisions were approved in April 2012 as part of the Jumpstart Our Business Startups Act, or Jobs Act, broad legislation designed to make it easier for young companies to raise capital, attract investors and ultimately go public.
“The law specifically alters some of the financial disclosures and accounting practices required of “emerging growth companies” — defined as firms with less than $1 billion in revenue — as they pursue public offerings.”
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“Steve Hall, securities specialist at Better Markets, a D.C.-based nonprofit group that pushes for financial transparency and reform, said the organization’s concern with the provision stems from information being screened or scrapped before being released to investors.”
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