Welcome to Offering Communications and Research Safe Harbors: the unit that draws the line between a routine announcement about a registered deal and an illegal offer under federal securities law.
Exam Weight: 2 scored items within Function 1 (25 items / 50% of exam)
What You'll Learn
In this unit, you'll cover:
- The Tombstone Communication: what a firm may publish about a registered offering once a registration statement has been filed, and the legend it must carry before that statement is effective
- The Notice of a Proposed Offering: the narrow notice an issuer may publish before any registration statement exists, and why it can never name the underwriters
- Generic Advertising: the safe harbor that lets a sponsor describe investment company types in general terms without naming a specific fund
- The Research Report Safe Harbors: how a broker-dealer can keep publishing research on an issuer around the time of a registered offering, and what changes depending on whether the firm is part of the distribution
- "Preceded by a Prospectus": how this rule times prospectus delivery ahead of a security-holder vote on a reclassification, merger, consolidation, or asset transfer
- Electronic Offerings and the General-Solicitation Trap: why an unrestricted website or email blast can condition the market for an offering, and how firms manage that risk
Why This Matters
Most safe harbors in this unit protect a registered offering. Two of the three research report safe harbors also reach a qualified institutional buyer private resale and a Regulation S offshore offering.
None of them gives a private issuer permission to advertise a private placement. A representative who understands where these safe harbors end also understands why a private deal still needs a restricted, targeted communication plan.
These safe harbors also sit next to the private-offering rules you already know:
- The tombstone communication rule and the proposed-offering notice rule protect ordinary deal communications from being treated as an illegal offer.
- The three research report safe harbors keep a firm's ongoing research from being pulled into a registered distribution, one by keeping the firm out of the underwriter definition and two by keeping the report from counting as an offer.
- The pre-vote prospectus delivery rule and the electronic-solicitation guidance both turn on timing and targeting, the same themes that run through Regulation D.
Let's start with the tombstone communication rule, the safe harbor most representatives meet first.