My understanding is as follows: In a traditional IPO, the company finds a bank to underwrite the deal and that bank gets shares. That bank is then taking on th

My understanding is as follows: In a traditional IPO, the company finds a bank to underwrite the deal and that bank gets shares. That bank is then taking on the risk of the shares flopping and tries to sell. The SEC rules protect the underwriting bank from competition during that time. In a direct listing, the shares are coming from the current shareholders, so there is no need to stop competition because there is no third party to compete against. A Cynic might say the bank expects a bubble 6 mo out, but I'd assume that's either baked into the fees/cost (4-7% as per the article) or they believe the shares of the company will be worth more eventually.