Today, we learned that SolarCity has filed for an IPO. In the past, when this happened, companies filed at S-1 which gaves us our first real look at the numbers that underly their business. How much revenue? How much profit? How much do they pay their executives? Who owns how many shares?
Alas, now that Congress has passed the JOBS Act and President Obama signed it, we know zip. That’s because the JOBS Act allows companies that have less than $1 billion in revenue to file non-public drafts with the U.S. Securities and Exchange Commission. The SEC will review and advise on necessary changes. Once it’s tidied up, just a few weeks before the company actually starts selling shares, we’ll get a peak.
This is just one of many ways the JOBS Act, so beloved by Silicon Valley, rolled back the movement toward greater transparency. It’s an appalling step backward for shareholders, and would seem to violate the philosophy of anyone who believes the age of the Internet promises to deliver any number of social, economic and financial improvements by fostering more openness.
Alas, Silicon Valley fell for this unholy piece of sausage because it included a diluted version of crowdfunding to startups. Now, we’ll begin to see that it’s not small entrepreneurs who will benefit. It’s larger companies and their bankers who will get to hide behind another cloak of secrecy. In other words the very actors who should be subject to greater scrutiny, not less.