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Blackstone's IPO Revives Debate Over Validity of 'Quiet Period'

Blackstone's IPO has renewed debate over the so-called quiet period--when the company issuing stock is subject to SEC restrictions on public statements.

Andy Thorpe, associate from Morrison & Foerster, and Brian Lane, partner from Gibson, Dunn & Crutcher discussed on "Morning Call" whether quiet period rules should be eliminated.

“SEC adopted rule changes in December 2005, which made it easier for press accounts,” said Lane. “(But) people aren’t using it that much. They’ve had over 70 years of “training” to be careful about what they’re saying and taking liability.”

“No one’s using the new method because what the SEC didn’t do was reduce the level of liability that those statements are going to be subject to,” agreed Thrope.

He also exemplified that the SEC rules were drafted in response to the Google situation when Google offering was delayed four weeks because Playboy had published an interview that came out a week before Google was going to be priced.

“Does that make any sense? I don’t think so,” criticized Lane. “In 2005, (SEC) changed it so that you can use press stories, but they still won’t let you issue press releases, except in limited ways.”

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