Online IPOs Create New Set of Tools for Free Enterprise

I must disagree with “Online IPOs Falling Short of Expectations” (May 26). The online IPO has proven to be a viable and practical vehicle for investors and small corporations. The real issue is the historic role this market segment plays in the industry--a role that is expanding very fast.

As the Internet forges ahead, pushing the old school to the side, the phenomenon of the online stock offering cannot be merely dismissed or looked at as the “red-headed stepchild” of the online financial services industry.

Is it fair for promising young companies to get raked through the coals by venture capitalist? Is it fair for individual investors to be charged exorbitant brokers fees and still be left in the dark? The online IPO embodies the spirit of American entrepreneurship. Small corporations can raise capital when most needed and investors can do the unthinkable: make their own investment decisions.

The simple facts are these: By allowing investors to match up with corporations directly, the middlemen are cut out. This may not be good if you’re a middleman--but the investor avoids fees and the corporation avoids extensive marketing costs and sales commissions. The bottom line: The investor gets more for their money. The investor also has the option to take smaller risks, with minimum stock investments as little as $300 and $500 dollars.

Thanks to the foresight of the Securities and Exchange Commission and online IPO pioneers a whole new set of tools exists for free enterprise. We’ve been complaining for years about corporate America; isn’t it about time Middle America got a piece of the action?

A. JONATHAN BUHALIS

President and CEO

Virtual Wall Street

West Los Angeles