Bill Hinman worked on major tech deals before joining the agency
to encourage more public offerings Big-deals lawyer Bill Hinman
joins agency to spur more public offerings
By Dave Michaels
WASHINGTON -- To spur more companies to go public, the new head
of the Securities and Exchange Commission has turned to a veteran
Silicon Valley lawyer whose career has involved some of the biggest
deals in history.
Bill Hinman has worked on initial public offerings and other
transactions that involved Apple Inc. founder Steve Jobs, Google
Inc. founders Larry Page and Sergey Brin, and Facebook Inc. chief
executive Mark Zuckerberg.
Mr. Hinman, 61 years old, a former partner at Simpson Thacher
& Bartlett LLP in Palo Alto, Calif., is the first SEC director
in years to come from Silicon Valley rather than New York, Boston
or Washington.
He will direct the SEC's Corporation Finance division, which
oversees IPOs and the voluminous disclosures that explain the
business to investors. New commission chairman Jay Clayton, at his
Senate confirmation hearing in March, called for scaling back
requirements on listed firms, saying the government should make it
"more attractive" to go public.
Mr. Clayton's tenure could mark a shift for the state of U.S.
public companies, which have faced mounting regulations since the
U.S. dot-com bust and Enron Corp. accounting scandal of the early
2000s along withe Dodd Frank financial-overhaul law of 2010.
The U.S. now has a deficit of more than 5,000 listed companies,
compared with the number predicted by its level of wealth and
investor rights, according to research by economists Craig Doidge,
Andrew Karolyi and René Stulz.
In an interview, Mr. Hinman said he didn't believe the decline
in the number of public companies could be blamed entirely on
regulation. But he said spurring more public offerings is a worthy
goal of regulators, because investors benefit from the detailed
public disclosures.
He also expressed interest in expanding the 2012 Jumpstart Our
Business Startups Act. The law, passed with bipartisan support, was
hailed as the first sign that Washington understood how the
internet could be used to help smaller companies raise money
without turning to Wall Street.
"To the extent the SEC can make it more attractive and efficient
to raise capital here, we are going to want to do that," he said.
"That is our primary focus and challenge going forward."
Some of the companies Mr. Hinman has worked with or helped take
public over the past two decades diverged from the traditional
model of a public firm. He advised Apple in the 1990s on the deal
that brought Mr. Jobs back to the company, which involved the
purchase of Mr. Jobs's other company, NeXT Software Inc.
In 2004, He also worked on Google's IPO, which used a Dutch
auction. The process was designed to yield an opening price that
more accurately reflected the value of the company.
That outcome could mean that investors who secured shares
through the auction couldn't quickly unload them for a profit,
because the stock was less likely to rocket higher during first day
trading. Mr. Hinman urged the company to disclose the risk in plain
English, telling auction buyers they could be victims of a
"winner's curse": On one hand they had secured shares of a hot IPO,
and on the other they could lose money if they tried to sell them
immediately.
"Bill turned a seeming bug into a feature," said Michael Grimes,
head of technology banking at Morgan Stanley, which was the lead
bank on the deal.
Mr. Hinman grew up in upstate New York. His mother was a
telephone operator for the Crouse-Hinds Company, a specialty
manufacturer of electrical equipment, and his father was a billing
clerk for the Oscar Mayer Company. Both of his grandfathers worked
at an Alcoa plant in Massena, N.Y., across the St. Lawrence River
from Canada.
After studying as an undergraduate at Michigan State University
and graduating from Cornell University Law School, he joined the
bank regulatory group at Shearman & Sterling LLP's New York
office. In 1989, Mr. Hinman was involved in Mexico's debt
restructuring, a deal that led to several more years of work in
Brazil and Argentina.
Burned out from constant travel, he relocated to California in
1994 to focus on technology clients, partly because it would allow
him to work with clients that were close to home. Mr. Hinman bought
a house in Montana several years ago in anticipation of retirement
and doing more fly-fishing and skiing.
"If you practice in Silicon Valley you don't have to travel as
much because you have a lot of great companies in your backyard,"
he said. "The companies innovate in products and services and that
carries over to how they raise capital and run themselves. So from
an SEC lawyer's perspective, it's always been a fun
environment."
Over the past five years, Mr. Hinman helped take public Facebook
and Chinese e-commerce company Alibaba Group Holding Ltd., whose
2014 listing was the biggest IPO ever. Alibaba's deal was
especially complex because it involved a giant Chinese firm that
had to satisfy regulators and investors in both China and the
U.S.
Mr. Hinman worked on the transaction with Mr. Clayton, who
represented the banks that sold Alibaba's shares to the public.
In Silicon Valley, he has watched big, private companies put off
IPOs in favor of raising more cash from private investors.
Companies raised $2.1 trillion in private placements of stocks
and bonds in 2014, compared with about $1.35 trillion for public
sales of equity and debt, according to SEC figures. The collapse in
U.S. listings has happened as fast-growing startups such as Uber
Technologies Inc. have been able to get the cash they need from
venture capitalists.
Some market participants say they don't see the problem that Mr.
Clayton has said he wants to solve. "The real question is do
small-growth companies have access to capital, and they do," said
Robin Graham, managing director and head of technology, media and
communications at Oppenheimer & Co. Inc. "It's just in the
private markets."
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
May 13, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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