You can generally expect it to take approximately 30 calendar days from the time the registration statement is ﬁled with the SEC for the staff to complete its initial review and furnish its comments to you.
In addition to ﬁling the registration statement with the SEC, ﬁlings must also be made in the states in which your company intends to offer the securities, as well as with the NASD.
Often a company and underwriter will agree to all the terms of an offering, but realize that the timeframe to complete the offering will coincide with a negative marketing environment such as summer vacations or the end-of-the-year holidays. In order to accommodate this problem, to help minimize certain costs, and to aid in “controlling” the market for the company’s stock, many companies have taken advantage of “silent” or “quiet” ﬁlings.
Prior to the mandatory use of EDGAR, these ﬁlings entailed sending a written registration statement to the SEC for their initial review and waiting until all SEC staff comments were resolved prior to printing the registration statement and prospectus, i.e., the ﬁrst printed version was the amended registration statement. As such, the selling effort did not take place until all SEC staff comments had been resolved. While the “silent” ﬁling was always a matter of public record, with the mandatory use of EDGAR and the advent of electronic ﬁling tracking services, knowledge of and accessibility to the “silent” ﬁling by the public is now much easier. Even so, publicity can be kept to a minimum by not distributing a “red herring” prospectus or mentioning the transaction in company press releases.
This type of ﬁling allows the SEC staff time to review your registration document and usually allows your company time to complete one more quarter of results. This strategy allows difﬁcult accounting or disclosure issues to be resolved with the staff or the slow marketing period to pass without hurting the offering’s perception in the marketplace.
Commencing the selling effort
No offering of securities, either orally or in writing, is permitted before the registration statement is initially ﬁled with the SEC. These rules are very strict, and your company must be careful not to generate undue publicity about itself that could be construed as an attempt to stimulate interest in its securities.
After the initial ﬁling, however, and concurrent with the preparation of the amended registration statement, SEC regulations do permit certain types of promotional activities within the brokerage community, such as those noted below.
The preliminary prospectus or “red herring”
A preliminary prospectus may be sent to interested institutions or persons prior to the effective date of the registration statement. This preliminary prospectus is a key tool in the lead underwriter’s ability to form an underwriting syndicate, made up of various brokerage companies, that will distribute the stock. While in the past companies have occasionally printed and distributed the red herring prior to receipt of SEC comments, companies are now encouraged not to print the red herring until SEC comments have been received, reviewed, and incorporated into the draft prospectus.