Pre-Filing Matters – What is “insider trading”? – (24)

affiliates or business partners, that must be disclosed in the prospectus. The D&O questionnaire usually tracks the specific SEC and FINRA disclosure requirements. In some cases, holders of more than 5% of the company’s equity will also be asked to execute a D&O questionnaire.
Typical areas of concern include:
Business, including management presentations and discussions, customer and supplier calls or meetings, trips to company facilities, in-depthreview of financial positions and results and general discussions with the company’s accountants;
Accounting, including audits, changes in accounting policies, critical accounting policies and tax issues, cheap stock issues, capital structure and comfort letters and the level of comfort to be provided;
Legal, including outstanding and even closed claims and litigation, loan agreement restrictions, third party consents, FINRA issues, intellectual property, labor, environmental, regulatory or other issues and legal opinions; and
Management and corporate governance,including composition of the board, director independence, senior management team changes, related party transactions and board actions relating to the IPO.
What is “insider trading”?
Federal securities laws impose significant restrictions, and may impose civil and criminal liability, on the company’s personnel who trade securities on the basis of materialnon-public information. While this is not a

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