Securities Regulation Question Re: Prospectus Amendment

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BigRob
Posts: 140
Joined: Tue May 07, 2013 8:30 pm

Securities Regulation Question Re: Prospectus Amendment

Postby BigRob » Tue May 07, 2013 9:49 pm

What happens if, in the waiting period, you advertise with a preliminary prospectus but then the SEC forces you to amend it? When you go effective, make sales, and deliver the final prospectuses, can the investors who were recipients of the original, pre-revision prospectus get rescission?

If so, what steps should the issuer have taken to avoid the problem?

keg411
Posts: 5935
Joined: Tue Apr 21, 2009 9:10 pm

Re: Securities Regulation Question Re: Prospectus Amendment

Postby keg411 » Wed May 08, 2013 9:29 am

BigRob wrote:What happens if, in the waiting period, you advertise with a preliminary prospectus but then the SEC forces you to amend it? When you go effective, make sales, and deliver the final prospectuses, can the investors who were recipients of the original, pre-revision prospectus get rescission?

If so, what steps should the issuer have taken to avoid the problem?


You can't confirm sales without a 10(a) final prospectus (and in some cases, just filing the 10(a) prospectus with the SEC is sufficient), so as long as the people who got the unamended prospectus also got a final prospectus/the 10(a) prospectus is properly filed, they can't get rescission.

Think about it practically -- during the waiting period, the SEC usually asks for prospectus updates. Expecting everyone who is offered during that period to have the most up-to-date prospectus is not practical. That's why once you go effective and make sales, you have to deliver the final, up-to-date prospectus in some way.

If this is wrong, someone can correct me, but I'm pretty sure of this.




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