What is a 'Tombstone'

A tombstone is a written advertisement of a public offering placed by investment bankers who are underwriting the issue. It gives basic details about the issue and lists each of the underwriting groups involved in the deal. The tombstone provides investors with some general information and directs the prospective investors to a link where they can obtain a prospectus.


A tombstone is one component of the disclosure requirements for security offerings required by the Securities and Exchange Commission (SEC). The tombstone is simply an announcement that securities are available for sale. When a security is issued to the public, the SEC requires that each investor receive a prospectus. The prospectus requirement applies to an initial public offering (IPO), which refers to the first time an issuer sells any type of security to the general public. If XYZ already has common stock outstanding, however, it can issue a secondary offering to sell more shares to the public. A tombstone for a secondary offering is mailed to all investors who already own the security, and all secondary offerings are sold using a prospectus.

Factoring in Underwriters

An underwriter is responsible for managing the legal and accounting process of creating a prospectus. The prospectus includes the issuer's most recent set of audited financial statements, as well as a legal opinion regarding the existence of any pending legal matters. A prospectus goes into great detail about the firm's marketing, production and sales process, and it explains why the company is raising more capital. In addition to the underwriters, there may be many other members of the syndicate who are brought in to sell the securities to their customers. The underwriter's sales force also sells the newly issued securities.

Examples of Tombstone Information

A tombstone advertisement gets its name from its black border and heavy black print. The tombstone lists the syndicate members who are involved in the underwriting of the security, with the primary members listed in larger type at the top of the advertisement. A syndicate member's level of involvement is based on the work the member performs on the security offering and the percentage of the total issue that the member's firm sells to the public. If a syndicate member is listed at the top of a tombstone for a popular issuer of stock, that document helps the syndicate firm market its expertise to other companies.

The tombstone describes the types of securities that are offered, the date they are available, the number of shares or bonds to be sold and how the securities can be purchased. If a new debt security receives a credit rating, that rating can be included in the tombstone.