Permissible Communications: Waiting Period

The waiting period is when the deal team takes its show on the road. Filing has happened, but the registration statement is not effective yet. Sales remain prohibited, but oral and certain written marketing is open.

Tombstone Announcements

The tombstone announcement is a narrow factual notice that does not trigger the prospectus-content restrictions.

Permitted content of a tombstone:

• Issuer's name and a brief description of the business
• Title and amount of securities being offered
• Brief description of the securities (common stock, senior notes, preferred)
• Underwriter names
• Price range or expected price (factual, not promotional)
• Anticipated timing of the offering
• Where the prospectus is available

NOT permitted in a tombstone:

• Price language that reads as an offer or a recommendation to buy
• Selling commentary about why the securities are attractive
• Photographs of investment properties (REIT abuse, historically)
• Tax-benefit descriptions
• Solicitations for seminars where the deal will be discussed

The tombstone is the announcement, not selling literature. Anything beyond the categorical list of facts puts the communication outside the tombstone safe harbor and into the prospectus-content restrictions.

Exam Tip: Gotchas

• The tombstone lets you say a deal is happening; it does NOT let you solicit indications of interest. Soliciting indications of interest requires a preliminary prospectus or a permitted FWP.
• A tombstone with selling commentary is no longer a tombstone. Adding language like "an attractive opportunity for growth investors" pushes the communication outside the safe harbor and triggers the written-offer restriction.

Preliminary (Red Herring) Prospectus

The preliminary prospectus is the workhorse of the waiting period. The detailed content rules sit in the forms-of-prospectus section; the key role in the waiting period is to take indications of interest from institutional accounts.

• Permitted form of written offer during the waiting period
• Used in the road show as the formal disclosure document
• Indications of interest gathered from accounts are non-binding because no sale can be made until the registration statement is effective

Road Shows

The road show is the in-person and electronic marketing campaign run by the issuer's management and the underwriting syndicate.

• Live road show: management meets with institutional accounts in person or by video conference; the syndicate desk fields one-on-one and group sessions
• Electronic road show: the same management presentation recorded for distribution to accounts that cannot attend live
• Pre-recorded electronic IPO road show: the recorded version of an IPO road show does not need to be filed with the SEC if at least one version is made publicly available without restriction

Road shows must remain consistent with the red herring. Management cannot make material statements at the road show that go beyond the registration-statement disclosure; doing so would trigger a written-offer violation (an "oral" road-show statement that is materially different from the prospectus is effectively a free-writing communication outside any safe harbor).

Exam Tip: Gotchas

• The recorded IPO road show is exempt from filing if at least one version is publicly available. The exemption applies to the recorded version, not to the live road show, and it requires that an open-access version exist.
• Road shows are oral offers, not sales. The accounts at the road show are providing indications of interest, not contracts of sale. The order book becomes binding only after pricing and effectiveness.

Free-Writing Prospectus Framework

The free-writing prospectus (FWP) is the catch-all category for written waiting-period marketing material that is not the red herring and not a tombstone.

Gating condition: The FWP framework is available only if the issuer is not an ineligible issuer. Ineligible issuers (timely-filing failures, shell companies, recent-bankruptcy issuers, certain disqualified issuers) cannot use FWPs.

Substantive conditions:

• For non-reporting and unseasoned issuers: a preliminary prospectus that includes a price range must have been filed before any FWP is used, and the most recent statutory prospectus must accompany or precede the FWP
• Legend: the FWP must carry a prescribed legend pointing investors to the statutory prospectus on EDGAR. A safe-harbor cure is available for immaterial and unintentional legend omissions if certain corrective steps are taken
• Filing: an issuer FWP must generally be filed with the SEC. An offering participant's FWP (an underwriter's, for example) must be filed if it is distributed in a manner reasonably designed to lead to broad unrestricted dissemination
• Record retention: FWPs that are not filed must be retained for 3 years following the initial bona fide offering
• Media FWP: an issuer-unaffiliated media FWP must be filed within 4 business days of becoming aware of the publication

Examples of common FWPs: term sheets distributed to road-show attendees, marketing decks used at one-on-one investor meetings, written summaries of management presentations, marketing emails sent to institutional accounts after the road show.

Exam Tip: Gotchas

• The issuer's FWP is generally filed; the underwriter's FWP is filed only when distributed broadly. A bilateral FWP sent to one institutional investor is not "broadly disseminated" and need not be filed.
• The FWP framework is not available to ineligible issuers. Shell companies, timely-filing failures, and recent-bankruptcy issuers must rely on the red herring and tombstones alone.
• The recorded IPO road show is a kind of FWP that is exempt from filing if a publicly available version exists. Other recorded road shows (non-IPO) follow the standard FWP rules.

Think of it this way: the waiting-period marketing toolkit is three lanes wide. Lane 1 is the tombstone (a public-facing notice that the deal exists). Lane 2 is the red herring (the formal prospectus the syndicate uses to take indications of interest). Lane 3 is everything else in writing (the FWP), governed by legending and filing rules. Oral offers, including the live road show, sit outside all three lanes because they do not need a written-offer permission slip.

Research Reports

The third major category of waiting-period communication is research reports by broker-dealers about the issuer or its industry. Three separate safe harbors decide when a research report is not an "offer" and therefore can be published during a registered distribution. Those safe harbors get their own section.

Exam Tip: Gotchas

• Whether a research report is an "offer" depends on whether the broker-dealer is participating in the distribution. Non-participating broker-dealers and participating broker-dealers operate under different safe harbors with different conditions.