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"Like most regulation, the rules were designed to protect investors. \u00A0Now they&amp;#8217;re just keeping them in the dark.\n\n  \nFORTUNE &amp;#8212; In June, Groupon chairman Eric Lefkosky defended his money-losing company by predicting that it would become \u201Cwildly profitable.\u201D His comment sparked a Wall Street brushfire, because it arguably violated \u201Cquiet period\u201D rules that prevent private companies from discussing themselves while in registration to go public. The reaction was to be expected. Back in 2004, Salesforce.com \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tCRM\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t was forced to delay its IPO after cooperating with a New York Times\u00A0profile of the company and its founder, Marc Benioff. Just a few months later, Google took SEC heat after its founders gave an interview to Playboy that was published after Google had submitted its IPO paperwork.\nBut the restrictions were ridiculous seven years ago and remain ridiculous today. Neither Groupon nor any other IPO candidate should be forced to deal with antiquated investor-protection rules that defy common sense and ultimately protect one set of investors at the expense of another.\nIt\u2019s worth noting that the pre-IPO \u201Cquiet period\u201D doesn\u2019t actually exist, at least not officially. The phrase is entirely absent from the SEC\u2019s reams of regulations. Instead, it\u2019s legal shorthand for a series of securities laws drawn up in the 1930s, when information-starved investors kept getting fleeced by snake-oil salesmen. Basically, let the IPO registration speak for itself.\nThe SEC tried loosening things up a bit in 2005 \u00A0&amp;#8212; partially in response to the Google \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tGOOG\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t fiasco &amp;#8212; but the changes were largely cosmetic. Companies suddenly were allowed to talk with the media, but only if their statements tracked almost exactly with the offering documents. \u201CWhen I have conversations with CEOs who want to make public statements, I first want to know if they\u2019re trying to sell their product, which is allowed, or if they\u2019re really trying to sell their company, which isn\u2019t,\u201D says corporate attorney Mark Bettencourt.\n\n  13 startup stars on the verge of an IPO\n\nKeeping your mouth shut may work for many IPO candidates, but it seems to be failing a high-profile issuer like Groupon. The company has become a media punching bag since registration, getting attacked for everything from its accounting practices to its vendor relationships to its long-term viability.\nIt\u2019s the kind of drumbeat that could scare off potential investors or dissuade new users from signing up &amp;#8212; hurting both the company and its product. Groupon certainly deserves some of the knocks &amp;#8212; particularly for an accounting gimmick that underplayed marketing expenses &amp;#8212; but the company also has been forced to remain silent in the face of more specious critiques. The only exceptions came when Groupon amended its registration statement to disavow Lefkosky\u2019s \u201Cwildly profitable\u201D quote, a leaked memo to company employees, and a sarcastic corporate blog post about quiet periods.\nThe irony, however, is that while Groupon cannot easily defend itself in public, it will soon be able to do so in front of a select, private audience of institutional investors who may participate in the IPO.\nCompanies going public typically produce an electronic road show, in which the CEO and other company executives make a presentation about the company and then take questions from prospective investors. It is available to the public online until the stock begins trading. In these sessions CEOs are instructed to keep referring to the IPO prospectus and not speak too much off the cuff.\nWhat follows are private meetings with the money managers. Transcripts are rarely kept, and some sources say that a comment like Lefkosky\u2019s would not be unusual. Neither would an answer to a question that the CEO declined to address during the electronic road show. Even if CEOs stick to the script, hedge fund managers can watch body language and other nonverbal cues that the public never sees.\nIt\u2019s time for the SEC to let companies communicate more freely with everyone, not just the chosen few. Today\u2019s investors have easy access to all sorts of information &amp;#8212; including SEC filings &amp;#8212; and are unlikely to be suckered by just a few optimistic syllables uttered to a reporter. It\u2019s too loud a world to keep these companies so quiet.\nThis article is from the September 26, 2011 issue of\u00A0Fortune."^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2011/09/06/its-time-to-kill-the-ipo-quiet-period/?iid=SF_F_Lead/>