Quick Answer
A registered offering runs through three phases (pre-registration, a cooling-off of at least 20 calendar days with only a red herring and indications of interest, then post-effective sales). Regulation D private placements skip registration, exempt classes still owe antifraud, municipals use a Preliminary Official Statement and Official Statement, and prospectus delivery carries hard deadlines.
The whole unit on one sheet: the phases, the documents, the exemptions, and the deadlines the exam loves.
The Three Phases of a New Issue
- Pre-registration: before the registration statement is filed. No offers, no sales, no solicitation.
- Cooling-off: after filing, before the SEC declares it effective. Minimum 20 calendar days (often extended by a deficiency letter or stop order). Deliver the preliminary prospectus (red herring); solicit indications of interest only; no prices confirmed, no money accepted.
- Post-effective: the SEC has declared it effective. Accept orders; deliver the final prospectus no later than the trade confirmation.
Filing the registration statement starts the 20-day clock. Part I becomes the statutory prospectus investors see; Part II is filed with the SEC but not distributed.
The One-Liners That Win Points
- Firm commitment: underwriter is a principal, buys the whole issue, and eats unsold shares. Best efforts: underwriter is an agent; unsold shares go back to the issuer.
- Selling group members sign the selling group agreement, not the underwriting agreement; they earn the selling concession and take no unsold-share risk.
- Indications of interest are non-binding both ways and must be re-confirmed after the registration is effective.
- A red herring omits the final offering price, effective date, and net proceeds.
- Accredited investor means over $200,000 income (or $300,000 joint) in each of the last two years, or over $1 million net worth excluding primary residence, or holding a Series 7, 65, or 82 in good standing.
- Form D is filed within 15 days AFTER the first sale, never before the offering begins.
- Municipals have no "prospectus": the POS is the preliminary document, the OS is the final one (posted to EMMA).
- A Notice of Sale solicits underwriters, not investors, and appears in The Bond Buyer for competitive deals.
- Exempt from registration is never exempt from antifraud.
Numbers to Lock In
| Item | Value |
|---|---|
| Cooling-off minimum | 20 calendar days |
| Reg D small-offering cap | $10 million per 12 months |
| Traditional Reg D non-accredited cap | up to 35 sophisticated |
| Accredited-only variant non-accredited | zero (verification required) |
| Form D filing | within 15 days of first sale |
| Entity accredited-investor asset test | over $5 million |
| Commercial paper maturity | 270 days or less |
| Intrastate doing-business test | 80% (any one benchmark) |
| Intrastate resale restriction | 6 months from last sale |
| 48-hour rule | first-time IPOs only |
| Aftermarket delivery: standard IPO / follow-on / exchange-listed | 90 / 40 / 25 days |
| Customer account record delivery | within 30 days, then every 36 months |
| Taping rule look-back | 3 years |
| Taping rule grace period | 60 days |
Reg D: The Two Unlimited-Dollar Variants
- Traditional private placement: unlimited dollars, unlimited accredited plus up to 35 sophisticated non-accredited, no general solicitation, self-certification acceptable.
- Accredited-only general-solicitation variant: unlimited dollars, zero non-accredited, general solicitation permitted but the issuer must take reasonable steps to verify accreditation.
Top Gotchas
- The 20-day cooling-off is a minimum, not a fixed date; registration is effective only when the SEC says so.
- Primary residence is excluded from the $1 million net worth test, and accreditation is not only about wealth (a Series 7, 65, or 82 qualifies).
- The 35-purchaser cap is the traditional variant only; the general-solicitation variant allows zero non-accredited.
- The 48-hour rule applies to IPOs of first-time issuers only, and the preliminary prospectus must arrive at least 48 hours before the confirmation.
- Intrastate is all-or-nothing: one out-of-state sale destroys the exemption for everyone (contrast Reg D's insignificant-deviation relief).
- The modernized intrastate safe harbor allows out-of-state offers but still bars out-of-state sales.
- Customer account records go out within 30 days of opening, then every 36 months; do not confuse the two.
- Taping rule middle tier (10 to 19 reps) is 4 registered persons, not a percentage (small is 40%, large is 20%); a disciplined firm was expelled or had its registration revoked, not merely fined.
One-Breath Recap
Classify the phase first (pre-registration is silent, cooling-off allows only a red herring and indications of interest for at least 20 days, post-effective is when sales happen and the final prospectus is delivered). Match the exemption to the deal (Reg D caps non-accredited at 35 traditionally or zero with general solicitation, intrastate demands 80% in-state and is all-or-nothing, municipals use a POS and OS instead of a prospectus). Nail the deadlines and remember exempt from registration is never exempt from antifraud.
Need more than the recap? This is a condensed summary. If it is not enough, read the full Soliciting Business and New Issues unit for the complete lesson.