It is crucial to understand that the issuer and the underwriting syndicate cannot sell securities, solicit requests for orders or send out any research report or any report that discusses the company's future sales and earnings during the period between the filing date and the effective date.

They can publish a tombstone advertisement, which contains a standardized clause that merely announces the new issue but disclaims the tombstone as an offer to sell or solicit orders. In addition, unsolicited requests for information may be met by sending out a preliminary prospectus.

No subscription payments may be requested, even if they are held in escrow until the effective date. Although a red herring can be sent to prospective purchasers without them requesting it, direct solicitations may be made only by means of a final prospectus.

Prospectus Delivery
The managing underwriter provides both preliminary and final prospectuses to the broker-dealers participating in the distribution. These dealers, in turn, provide prospectuses to clients over the 25-day period following the effective date if the securities are listed on a national exchange or on the Nasdaq.

There is no aftermarket prospectus requirement if the security is already listed on these markets. The prospectus delivery requirement for non-Nasdaq OTC securities is 90 days if the company has never before issued an IPO, or 40 days if the security has been previously listed.

Exempt Securities
Securities exempt from registration under the Securities Act of 1933 include the following:

  • US government and Federal agency issues
  • Municipal and state issues
  • Intrastate offerings
  • Small public offerings
  • Private placements
  • Insurance policies, including fixed annuity contracts
  • Commercial paper and banker acceptances with maturities of 9 months or less


Exam Tips and Tricks
The term exempt securities refers to those securities that are not required to follow the procedures of registration and prospectus requirements set forth by the Securities Act of 1933. You should know which securities are exempt from registration under \'33 and why. Again, the \'33 Act was passed to ensure full disclosure to the investing public.



Regulation A, D and Rule 147

Related Articles
  1. Investing

    What's a Prospectus?

    The Security and Exchange Commission (SEC) requires that any company raising money from potential investors through the sale of securities must file a prospectus with the SEC and then provide ...
  2. Investing

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.
  3. Investing

    An Insight on the Prospectus of Corporate Bonds

    Making a well-informed decision with respect to buying a corporate bond involves reading the significant facts and details of the prospectus document.
  4. Investing

    The Road To Creating An IPO

    Through an Initial Public Offering, or IPO, a company raises capital by issuing shares of stock, or equity in a public market. Generally, this refers to when a company issues stock for the first ...
  5. Financial Advisor

    The Issuance Procedure of Corporate High-yield Bonds

    Issuing debt over equity can have several advantages for companies. Here we have a detailed look on the issuance procedure of corporate high-yield bonds.
  6. Investing

    5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  7. Financial Advisor

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
  8. Insurance

    Brokerage Functions: Underwriting And Agency Roles

    Learning about these various activities can give insight into how securities are issued and traded.
  9. Investing

    Prepping for Canada Goose's First Public Earnings Report

    The first earnings report after an IPO provides lots of insight into newly public companies.
  10. Insurance

    5 Tips For Investing In IPOs

    It’s not easy to profit from IPO​s, but the money is there.
Frequently Asked Questions
  1. How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlation formula to correlate ...
  2. What is the Difference Between International Monetary Fund and the World Bank?

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ...
  3. Where Did the Bull and Bear Market Get Their Names?

    The terms bull and bear are used to describe general actions and attitudes, or sentiment, either of an individual (bear and ...
  4. What's the difference between Google's GOOG and GOOGL stock tickers?

    Learn the difference between Google's GOOG and GOOGL ticker symbols. Splitting shares into classes prevents management from ...
Trading Center