Middle Market IPO Cost Act

Bill Number: H.R. 3395
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Finance and Financial Sector
Status: Passed House
Latest Action: 2025-07-22: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Last Updated: 2026-07-11T01:08:25Z

AI-Generated Summary

Purpose

The Middle Market IPO Cost Act (H.R. 3395) aims to examine the financial burdens of initial public offerings (IPOs)—the process where a private company first sells its shares to the public—for small- and medium-sized companies. It directs an independent government audit office to investigate these costs and their broader effects, with the goal of informing potential policy improvements to support business growth and investor access.

Key Provisions

Mandated Study: The Comptroller General of the United States (head of the Government Accountability Office, or GAO, an independent agency that audits federal operations) must conduct a comprehensive study on IPO costs for small- and medium-sized companies. This will be done in consultation with the Securities and Exchange Commission (SEC, the federal agency regulating securities markets) and the Financial Industry Regulatory Authority (FINRA, a self-regulatory organization overseeing brokerage firms).
Study Scope:
Analyze direct costs (e.g., fees for accountants, underwriters who help sell shares, and other advisors) and indirect costs (e.g., complying with federal and state securities laws, which are rules governing stock sales).
Compare IPO costs to alternatives like private funding or other ways to provide liquidity (ability to convert assets to cash).
Assess how these costs affect capital formation (raising money for business expansion) and the availability of shares from small- and medium-sized companies to retail investors (individual, non-professional buyers).
Review trends over a suitable time period, including:
Number of IPOs.
Evolution of fees for underwriters, advisors, and other professionals.
Number of active brokers and dealers (firms facilitating stock trades).
Types of services provided before and after an IPO and factors driving costs.
Changes in investment research availability and costs for smaller companies.
Effects of litigation (lawsuits) and related expenses on public companies.
Report Requirement: Within 360 days of the law's enactment, the GAO must submit a report to Congress detailing all findings, along with any recommendations for administrative (agency-level) or legislative (new law) changes.

Significant Changes to Existing Law

This act introduces a new requirement for a targeted GAO study on IPO costs, which does not exist in current law. It does not amend or repeal any prior statutes but adds a one-time investigative mandate to gather data that could influence future securities regulations.

Potential Impacts

Government Agencies: The GAO will allocate resources for the study and consultations, potentially leading to recommendations that affect SEC and FINRA operations, such as rule changes to lower compliance burdens.
Citizens and Businesses: Small- and medium-sized companies may benefit from insights that highlight cost barriers to going public, possibly easing access to public markets for growth. Retail investors could gain better opportunities to invest in diverse companies if costs decrease.
International Relations: Minimal direct impact, though findings on U.S. IPO trends could indirectly influence global capital markets by making U.S. listings more attractive or competitive.

Main Stakeholders Affected

Small- and Medium-Sized Companies: Primary focus, as they face high IPO costs that may deter public listings.
Financial Professionals: Accountants, underwriters, advisors, brokers, and dealers involved in IPOs, whose fees and services will be scrutinized.
Investors: Especially retail investors seeking access to shares of emerging companies.
Regulatory Bodies: SEC and FINRA, which provide input and may implement resulting recommendations.
Congress: Receives the report and could act on its suggestions to shape securities policy.
Litigants and Courts: Indirectly affected through analysis of lawsuit costs related to public companies.

Notable Legal, Constitutional, or Political Implications

Legal: The study could recommend reforms to securities laws (e.g., under the Securities Act of 1933, which governs IPOs) to reduce costs, potentially simplifying compliance without weakening investor protections. It emphasizes data-driven analysis, aligning with administrative law principles.
Constitutional: No significant issues; the act falls within Congress's commerce clause authority to regulate financial markets and does not infringe on free speech, privacy, or other rights.
Political: As a bipartisan tool for economic policy, it may spark debates on balancing business incentives with market safeguards. Recommendations could lead to future legislation promoting "middle-market" growth, influencing electoral discussions on entrepreneurship and capital access.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Himes, James A. [D-CT-4]

Cosponsors (2)

Rep. Sessions, Pete [R-TX-17], Rep. Lawler, Michael [R-NY-17]

Recent Actions

2025-07-22: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
2025-07-21: Motion to reconsider laid on the table Agreed to without objection.
2025-07-21: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H3511-3512)
2025-07-21: Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H3511-3512)
2025-07-21: DEBATE - The House proceeded with forty minutes of debate on H.R. 3395.
2025-07-21: Considered under suspension of the rules. (consideration: CR H3511-3513)
2025-07-21: Mr. Hill (AR) moved to suspend the rules and pass the bill, as amended.
2025-06-03: Placed on the Union Calendar, Calendar No. 98.
2025-06-03: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-128.
2025-06-03: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-128.
2025-05-20: Ordered to be Reported (Amended) by the Yeas and Nays: 50 - 0.
2025-05-20: Committee Consideration and Mark-up Session Held
2025-05-14: Referred to the House Committee on Financial Services.
2025-05-14: Introduced in House
2025-05-14: Introduced in House

Bill Versions

Middle Market IPO Cost Act — issued 2025-07-21 — PDF (6 pages)
Middle Market IPO Cost Act — issued 2025-05-14 — PDF (3 pages)
Middle Market IPO Cost Act — issued 2025-07-22 — PDF (4 pages)
Middle Market IPO Cost Act — issued 2025-06-03 — PDF (6 pages)