4.1.11. 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 and issued bonds of $750 mil