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Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble by D. Quinn Mills

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New Regulations to Protect Investors in IPOs

At the heart of the bubble and all its damaging consequences was the IPO process. The abuses of the process were not limited to who was allowed by the bankers to participate in the lucrative IPO process, and on what terms, though this aspect has been attracting the most attention in Washington. To better protect the interests of the retail investor, we propose a set of rules of the following nature:

  1. A venture capital firm and its investors cannot sell an investment in an IPO except on a phased schedule, for example, up to one third of its stake after six months following IPO; another third after nine months, and the final third one full year after the IPO. And any such sales must be reported to the ...

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