Conflicts of interest and other sorts of misconduct in the capital raising process can harm investor confidence and undermine the capital markets overall, the International Organization of Securities Commissions (IOSCO) warns in a new consultation paper.
To help regulators identify and address these issues IOSCO proposes new guidance in the report Conflicts of interest and associated conduct risks during the equity capital raising process.
The report aims to help regulators address conflicts of interest and related misconduct risks that can arise during the offering process, including:
- pressure on analysts during the pre-offering phase;
- conflicts in the allocation of securities;
- pricing conflicts; and
- personal trading by brokerage employees.
These sorts of conflicts “can threaten the integrity and efficiency of equity capital raising, damage investor confidence and undermine capital markets as an effective vehicle for issuers to raise funding,” IOSCO says in a news release.
IOSCO says its proposed guidance, “could help enhance the range and quality of timely information made available to investors during equity capital raising, improve the transparency of allocations, and increase the efficiency and integrity of the overall process.”
Comments on the report are due by April 4.