IPO Disclosures

  

We know when uninformed investors speculate with the purchase of new securities issues, they assume it’s all a one-way street to quick riches.

And when proven wrong, it’s someone else’s fault. They got the wrong information or were lied to; anything but the fact they never bothered to get the facts beforehand.

The company prospectus as a rule does a good job in its SEC filing, describing the risks involved. However, misinformed speculators and the plaintiff lawyers seeking to profit, usually fulminate about insufficient or poor information or disclosure. Or they claim insiders have gotten information that retail customers did not receive.

The fact is, the SEC itself is very strict about the way a company and its underwriters can make disclosures during the period leading to the IPO. What is legal in the eyes of the SEC may be an uneven playing field in the eyes of the public.

Moreover, brokers are now prevented from making comments on soon-to-be-issued securities. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)