The Wall Street Journal reported that the US government shutdown is forcing some companies to seek alternate routes to go public while the main markets regulator is unable to approve initial public offerings (IPOs).

According to people familiar with the matter, biotechnology companies Gossamer Bio and TCR2 Therapeutics have been exploring a little-used workaround that would let them begin trading without the usual US Securities and Exchange Commission clearance.

Companies can legally sell stock to the public 20 days after filing a registration statement that details required financial information and business risks, but in practice, most companies ask the SEC to trigger their filing after an in-depth review of their disclosures.

The news source noted that proceeding without the SEC signoff could carry substantive risk, some bankers and lawyers say, as if the IPO disclosures given to investors are later shown to have shortcomings, plaintiffs' lawyers could point to the unusual way the deals were done.

Once it opens, the SEC could also question whether a company's disclosures were complete, but "we would all expect the SEC would be reasonable and practical when they review IPOs that proceeded during the shutdown," commented Lona Nallengara, a partner at Shearman and Sterling who was formerly the SEC's chief of staff.

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