II 

117TH CONGRESS 

2D SESSION S. 3980 

To require the Securities and Exchange Commission to carry out a study 

of the costs associated with small- and medium-sized companies to undertake initial public offerings. 

IN THE SENATE OF THE UNITED STATES 

MARCH 31, 2022 

Ms. LUMMIS (for herself, Ms. SINEMA, Mr. WARNER, and Mr. HAGERTY) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To require the Securities and Exchange Commission to carry 

out a study of the costs associated with small- and 

medium-sized companies to undertake initial public offerings. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Middle Market IPO 

5 Underwriting Cost Act’’. 

6 SEC. 2. STUDY ON IPO FEES. 

7 (a) DEFINITIONS.—In this section: 


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1 (1) IPOS.—The term ‘‘IPOs’’ means initial 

2 public offerings. 

3 (2) SMALL- AND MEDIUM-SIZED COMPANIES.— 

4 The term ‘‘small- and medium-sized companies’’ 

5 means issuers with an initial public float determina6 tion of less than $700,000,000. 

7 (b) STUDY.—The Securities and Exchange Commis8 sion, in consultation with the Financial Industry Regu9 latory Authority, shall carry out a study of the costs asso10 ciated with small- and medium-sized companies to under11 take IPOs and Tier 2 offerings, as defined in section 

12 230.251 of title 17, Code of Federal Regulations. In car13 rying out such study, the Commission shall— 

14 (1) consider the direct and indirect costs of an 

15 IPO, including— 

16 (A) fees, such as gross spreads paid to un17 derwriters, IPO advisors, and other profes18 sionals; 

19 (B) compliance with Federal and State se20 curities laws at the time of the IPO; and 

21 (C) such other IPO-related costs as the 

22 Commission determines appropriate; 

23 (2) compare and analyze the costs of an IPO 

24 with the costs of obtaining alternative sources of fi25 nancing and of liquidity; 


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1 (3) consider the impact of such costs on capital 

2 formation; 

3 (4) analyze the impact of these costs on the 

4 availability of public securities of small- and me5 dium-sized companies to retail investors; and 

6 (5) analyze trends in IPOs over a time period 

7 the Commission determines is appropriate to analyze 

8 IPO pricing practices, considering— 

9 (A) the number of IPOs; 

10 (B) how costs for IPOs have evolved over 

11 time, including fees paid to underwriters, in12 vestment advisory firms, and other professions 

13 for services in connection with an IPO; 

14 (C) the number of brokers and dealers ac15 tive in underwriting IPOs; 

16 (D) the different types of services that un17 derwriters and related persons provide before 

18 and after a small- or medium-sized company 

19 IPO and the factors impacting underwriting 

20 costs; 

21 (E) changes in the costs and availability of 

22 investment research for small- and medium23 sized companies; and 

24 (F) any other consideration the Commis25 sion considers necessary and appropriate. 


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1 (c) REPORT.—Not later than the end of the 360-day 

2 period beginning on the date of the enactment of this Act, 

3 the Commission shall issue a report to Congress con4 taining all findings and determinations made in carrying 

5 out the study required under subsection (b) and any ad6 ministrative or legislative recommendations the Commis7 sion may have. 

Æ 


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