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Red Herring Prospectus

Red Herring Prospectus Definition

A red herring prospectus is a document submitted by a company (issuer) who intends on having a public offering of securities (either stocks or bonds) in the United States. Most frequently associated with an Initial Public Offering (IPO), this registration statement must be filed with the Securities and Exchange Commission(SEC).


Additional meaning of Red Herring Prospectus:

"Red-herring prospectus" means a prospectus, which does not have complete particulars on the price of the securities offered and quantum of securities offered.

The reason it is called a red herring is due to a disclosure statement printed in red ink on the cover which explicitly states that the issuing company is not attempting to sell its shares. e.g. "A Registration Statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. Information contained herein is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Registration Statement becomes effective."









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