The issuance of securities by public utilities is regulated at both the federal level by the Securities and Exchange Commission (SEC) and at the state level by state public utility commissions (PUCs). In this Article, Professors Gorman, Grace, and Vora critically assess the impact of these overlapping regulatory jurisdictions. Generally, the SEC and some PUCs require utilities to award underwriting contracts through a process of competitive bidding. While this requirement disciplines managers, the authors observe that under a competitive bid regime, an investment bank lacks the information to certify adequately a stock issuance. The absence of adequate certification contributes to underpricing, which adversely affects current shareholders.
Raymond F. Gorman, Martin F. Grace & Gautam Vora,
Public Utility Underwriting Costs and Regulatory Climate: An Examination of PUC and SEC Multiple Jurisdictions,
Yale J. on Reg.
Available at: http://digitalcommons.law.yale.edu/yjreg/vol10/iss1/3