Unicorns: SEC Takes Notice of Sky-High Valuations

By: Daniella Soloway

Securities and Exchange Commissions’ (SEC) Chair Mary Jo White addressed Stanford University’s Rock Center for Corporate Governance on a variety of issues, stressing that start-ups disclosing their valuations need to be sure of their financial accuracy.

Most start-ups rely on their valuation to seek investor interest, even though they are not held to the same financial transparency standards as public companies. The SEC explained that these unicorns are still subject to basic securities to protect investors, such as accuracy of information.

The current trend of start-ups holding out longer before initiating the IPO process means an even greater need for precise financial controls. White advised that these companies must increase internal controls in proportion to their operational scale, in order to protect investors’ interests.