Also known as: quiet periods · IPO quiet period · waiting period
Written by attorneys · grounded in primary & secondary sources — see below
A period of forty or ninety days after the effective date of a registration statement or the first bona fide public offering of a security during which dealers must deliver a prospectus in covered transactions to qualify for the exemption from registration and prospectus delivery requirements under section 4(a)(3) of the Securities Act of 1933. The period extends to ninety days for first-time issuers that have not previously sold securities under an effective registration statement. This interval ensures investors receive current information before dealers may freely trade without full compliance obligations.
Dealer Apex Securities sells shares of NewCo common stock thirty days after the registration statement becomes effective. Apex delivers a current prospectus to each purchaser. Because the quiet period has not expired, the delivery satisfies section 4(a)(3) and permits the transaction without further registration.
First-time issuer BioStart completes its IPO. Dealer Metro Brokers sells shares on day sixty without a prospectus. The SEC brings an enforcement action alleging violation of the ninety-day quiet period applicable to first-time issuers under section 4(a)(3).
Quest Capital discovers a major mineral find during its IPO registration process. Management issues a press release downplaying the discovery before the quiet period ends. Investors who purchased after the release sue, alleging the timing and content of the statement misled the market about material facts.
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The quiet period extends to ninety days after the effective date of the registration statement or the first bona fide offering to the public, whichever is later, when the issuer has not previously sold securities under an effective registration statement.
The quiet period governs dealers' transactions. It requires prospectus delivery for sales that would otherwise qualify for the section 4(a)(3) exemption until the period expires.
Yes. Section 4(a)(3) authorizes the SEC to shorten the period, and the Commission has done so through Rule 174 for dealers that are neither underwriters nor members of the selling group.
The section 4(a)(3) exemption and its quiet period apply to both dealers and underwriters who are no longer acting in that capacity.
…not be forced, despite an exercise of the best judgment, to act at their peril or refrain in terrorem from acting. As to a waiting period after the information regarded as "material" has been disclosed, any such time period should be specifically fixed by Congressional or Commission rule not retroactive in application. There…