6.2.2. Definition of a Prospectus
The prospectus is intended to provide disclosure to potential investors. At the same time, it is a sales document; it is (or should be) intended to be persuasive while still providing accurate, material, complete information about the offering. As the central selling document in a securities offering, the prospectus is subject to a host of regulatory requirements.
According to the Securities Act, a prospectus is:
Any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security.
The Act goes on to define “written” to include “any means of graphic communications,” which the SEC interprets as including electronic communications such as email, websites, faxes, videos, CD-ROMs, etc. The definition of written communications does not include unscripted presentations to a live audience, but does include rebroadcasts of a live presentation. (A prospectus in the form of a broadcast must be transcribed, and five copies filed with the SEC.) Telephone calls are also excluded from the definition of written communication, as are individual voicemails resulting from live telephone calls. Automated or “blast” voicemails, however, are included.
Additionally, you may have noticed that the statutory definition of a prospectus does not include non-broadcast oral communications, whether in face-to-face conversation or by telephone. The Securities Act permits oral offers once a registration statement has been filed (in other words, once