Communications Guidelines: Post-Effective Period
Acceptable communications:
- • Offers. All kinds of offers are now acceptable.
- • Sales. Sales are now acceptable, but they must be accompanied or preceded by a prospectus.
Prohibited communications:
- • Research communications about IPOs. Research analysts who work for a company that participated in an IPO (as either an underwriter or a dealer) may not make public appearances or release research reports on the issuer for 10 days after the IPO. This is called a quiet period; it can also be referred to as a blackout period. For follow-on offerings, research analysts who work for a manager or co-manager must not make public appearances or release research reports on the company for three days after the offering.
Sample Question 1
ABC Investment Bank wants to send out an advertisement to some of its clients about a new offering of XYZ Corporation. They will not be sending a prospectus with the advertisement. Which of the following cannot be included in the advertisement?
- A. The price of the security
- B. The names of the underwriters
- C. The expected ticker symbol and the securities exchange where the securities will be traded
- D. A solicitation of an offer to buy
Answer: D. Communications during the registration period can solicit an offer to buy if the communication is accompanied by a prospectus and includes a statement that no offer to buy can be accepted until after the registration statement is effective.
Sample Question 2
XYZ Corporation is a large company that has issued common stock with a public float value of $200 million