Series 79: Delivery Of Prospectus By Dealers (Rule 174)

Delivery of Prospectus by Dealers (Rule 174)

Any dealer that sells a security within 90 days, for an OTC IPO, (or 40 days in the case OTC follow-on offering) after the later of (1) the date the security was bona fide offered to the public or (2) the date the registration became effective is generally obligated to deliver a final prospectus to the purchaser. However, this requirement is subject to two limitations.

First, if the security is listed on a national stock exchange or NASDAQ, prospectus delivery is only required for 25 days after the offering date. Second, the dealer does not need to deliver a final prospectus at all if the issuer was a reporting company at the time it filed its registration statement.

Example: Viking completes an initial public offering. Shares of Viking Widgets will be traded on NASDAQ. It was not a reporting company at the time it filed its registration statement. Blindside & Pillage is a securities dealer that was not part of the selling group for the offering. Blindside & Pillage sells Viking shares 20 days a