11.1 Primary Market Offerings (1933 Act)
The primary market raises capital for issuers through IPOs and secondary offerings under the Securities Act of 1933.
Key FINRA Exam Takeaways
- Securities Act of 1933 ('Paper Act'): Regulates primary market new issues; requires full and fair disclosure.
- Registration Statement (Form S-1): Filed with SEC, initiating a mandatory 20-day cooling-off period.
- During cooling-off: NO sales, NO advertising, NO binding orders, NO recommendations. Permitted: Red Herring (preliminary prospectus), Tombstone ads, gathering non-binding indications of interest.
- Effective Date: SEC releases securities for sale. Final prospectus must be delivered at or before trade confirmation.
- Exempt Transactions: Regulation D (Private placements to accredited investors), Rule 147 (Intrastate offerings, 80% rule), Regulation A+ (Mini-IPOs).
Permitted vs. Prohibited Actions in Cooling-Off
Permitted: Distributing the Red Herring (preliminary prospectus without final price or effective date), publishing tombstone advertisements, accepting non-binding indications of interest. Prohibited: Taking orders, accepting cash deposits, distributing research reports on the issuer.
Interactive Knowledge Checkpoint • Section 11.1
During the 20-day cooling-off period following the filing of an SEC registration statement for an initial public offering, a registered representative is PERMITTED to: