The reason the SEC doesn't move faster is its concern that in a roadshow environment many individual investors won't be able to glean a company's real prospects. In its letter to Schwab, the SEC said it's waiting to address electronic roadshows more fully as part of an coming regulatory overhaul of the IPO process. In the meantime, though, small investors aren't being dealt with fairly. In fact, they're the only ones being shut out from roadshows. Obviously, there's an inherent conflict that the SEC is going to have to resolve.
Individual investors can learn a great deal from watching roadshows on the Net.
Even if individual investors have no intention of trying to get in on shares at the offering price, they can use roadshows to learn about new industries or technologies that will be hot next. A more open roadshow also would benefit companies coming public by helping build a stronger base of support for a new stock among individuals, says Alberto Vilar, portfolio manager of Amerindo Technology Fund. It would be easy for unsophisticated individuals to look at the roadshow and not be sufficiently skeptical about all the things that could go wrong that the executives aren't volunteering. The number of investors who are that gullible is likely to be small, however. While providing a free flow of information, the Web has also brought about an era of bogus e-mail pitches, inflammatory stock message boards, and widely quoted stock touts.