6.1.2. The Cooling-Off Period
The pre-filing period ends when the issuer and underwriter complete the registration statement and file it with the SEC. Once the registration statement is filed, the SEC will review it. As originally described in the Securities Act, this review is supposed to take 20 calendar days. This period is called the cooling-off period (or sometimes the registration period, waiting period, or quiet period) because the company will not be able to sell shares to the public, and only certain kinds of limited offers will be allowed. During this time, the SEC will not try to determine whether the security is a good investment. Rather, it will make sure everything that is supposed to be in the registration statement is actually in it.
An exception to the 20-day timeframe is if the registration statement is obviously incomplete or inaccurate (for example, if required information is just plain missing). In that case, the SEC will notify the issuer within 10 business days that it will not allow the statement to become effective until it has been amended.
If there’s no obvious problem, the registration statement undergoes the normal review process. If the SEC finds no material omissions or misleading statements, the registration statement will become effective, meaning that sales of the security may take place. If the SEC finds the registration statement to be inadequate in some way, it will send a deficiency letter. A deficiency letter is an order to amend the registration statement, often by providing additional information. Once an amendment has been filed, the SEC will review the amended registration statement. If the amendment did not satisfy the SEC’s concerns, the SEC will send another deficiency let