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SEC commissioner calls for curb on dual-class ‘forever’ shares

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Feb 15, 2018

On February 15, 2018, the Securities and Exchange Commission (SEC) released a speech by SEC Commissioner Robert Jackson Jr. where he discussed how the U.S. exchanges should consider barring companies that offer lifetime dual-class shares or requiring them to include sunset provisions.

Mr. Jackson and his SEC staff looked at 157 dual-class initial public offerings occurring over the past 15 years, and "immediately noticed some pretty significant differences" between the 71 companies with sunset provisions and the 86 without, and found that over time their predicted valuations diverged.

Seven or more years after their IPOs, firms without sunset provisions traded at a significant discount, and decisions by some firms to drop their dual-class structures later were associated with a significant increase in valuations, he said, noting that the analysis is preliminary but a subject "that deserves much further study."

Review the full speech on the SEC's website.

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