Introduction

Welcome to Investor Disclosure Materials: the rulebook that governs every word, slide, tweet, and term sheet a broker-dealer (BD) or issuer puts in front of investors during a registered offering. This unit is the communications layer of Function 5 on the Series 24 exam.

Exam Weight: Part of 21% (~32 questions across Function 5)

What You'll Learn

In this unit, you'll cover:

• The Securities Act Communications Framework: The bedrock prohibitions on offers and sales, the deliberately broad definition of "prospectus," statutory underwriter status, and the gun-jumping prohibition in the pre-filing period
• Pre-Filing Safe Harbors: The WKSI pre-filing-offer safe harbor, the 30-day bright-line shield for non-WKSIs, the regularly-released-information safe harbors, and the limited content permitted in a proposed-offering notice
• Waiting Period Disclosures: The red-herring preliminary prospectus, the pricing-omitted disclosure mechanic, shelf-takedown supplements, the tombstone safe harbor, and the dissemination requirement that conditions SEC acceleration
• Free Writing Prospectus: What an FWP is, who can use one, when it must be filed with the SEC, the legend requirement, the 3-year recordkeeping rule, and the trap that an FWP cannot replace a preliminary prospectus
• Post-Effective Delivery: Access-equals-delivery, the 48-hour preliminary-prospectus rule for IPOs, the 25 / 40 / 90-day dealer aftermarket delivery periods, and the 9-month / 16-month stale-prospectus rule
• Research as Communications: The non-participating-broker safe harbor that lets a firm publish research about an issuer it is not underwriting without that research becoming an illegal offer
• Forward-Looking Statements and Marketing Materials: The forward-looking-statement safe harbor in registration statements, the graphic communication definition that pulls recorded webcasts into the writing rules, and the FWP treatment of recorded electronic roadshows

Why This Matters

The Series 24 exam tests three principal-level questions on this material:

• Whether the firm has used the right type of communication for the right phase of the offering (no offers in pre-filing without a recognized safe harbor; no written offers in the waiting period unless they qualify as a preliminary prospectus, a tombstone, or a free-writing prospectus)
• Whether the firm has met the filing, legend, and delivery mechanics that turn a permissible communication into a defensible one (filing the FWP by first use, embedding the prescribed FWP legend, treating access-equals-delivery as the trigger for satisfied delivery)
• Whether the firm has supervised marketing decks, road-show recordings, and research reports so that none of them quietly slip into being an illegal prospectus

Three concrete examples of Function-5 violations:

• A firm whose research analyst publishes a "buy" report on a deal the firm is underwriting without falling inside the participating-broker research safe harbors has just gun-jumped
• A syndicate manager who circulates a recorded electronic roadshow to selected institutions without filing it as an FWP has created a gun-jumping violation
• A BD that confirms a sale before access-equals-delivery is satisfied has violated the prospectus-delivery requirement

Every one of these is a Function-5 question on the principal exam.

Let's start with the communications framework that sits underneath every other rule in this unit.