Bank of America, in an attempt to assist the fledgling European IPO market, aims at increasing European disclosure and transparency practices.
"There has been a lot of disappointment ... We are suggesting that all of us involved in IPOs have to do their part to contribute to improving the process," Craig Coben, the bank's head of equity capital markets for Europe, Middle East and Africa, told Reuters.
Like America, the European market for IPOs has not been very good. For example, more than 20 European IPOs have tanked in 2011 alone.
"Distrust has seeped into the process . . . we need to move beyond finger-pointing and find ways to make the process better."
Among some of the immediate changes the bank suggests are, "Earlier and more regular meetings between institutional investors and company management" as well as, "Full disclosure of fees paid to underwriters and advisers, and greater transparency on how performance fees are calculated."
In a letter to investment banks , the U.S.-based fund manager BlackRock illustrated the strained relationship between banks, advisers, investors and issuers.
"We should be comfortable with disclosing who is getting paid what and disclosure of fees will restore some trust. People want to know what fees are being paid to banks and advisors and on what basis those fees are being paid," said Coben.
Other proposals made by Bank of America include, "Allowing independent analysts, from banks not involved in an IPO, access to information on the company to provide a greater balance of research for investors." They also said that, "Large book running syndicates must be be better managed to make sure the leading banks on a deal take greater ownership and responsibility for its success."
"Where independent advisers are involved, there should be greater clarity on their role."
"These advisers need to ensure that they give no cause to be perceived by the market as, and do not inadvertently act as, a force for conflict in a sensitive process," the document states.
Coben said investors had so far responded positively to the suggestions.
The question that needs to be asked is this: Has the American IPO market been similarly assisted by Bank of America?
As mentioned in another article on The Blaze, the startup business is a necessary element for ensuring the long-lived prosperity of America. But the U.S. IPO market has been in decline for years. This means that although a company may or not be able to start, it will have a very difficult time expanding.
With the recession, the Passage of The Sarbanes-Oxely Act of 2002 (which places stringent regulations on new and mature public businesses), the credit crisis, and low consumer confidence, the American IPO has been put on life support.
The answer to the above question is "yes." In a recent Wall Street Journal article, Bank of America has decided to hire "nearly 100 small business bankers in Texas -- including Austin, Dallas, Fort Worth, Houston and San Antonio -- by the end of first quarter 2012." Their sole purpose will be to focus on the financial health of small businesses.
This raises an even bigger question: Should the U.S. IPO market seek assistance from sources like Bank of America or the government? Or should entrepreneurs rely on the bootstrap mentality?