Page "Initial public offering" Paragraph 31

In the USA, clients are given a preliminary prospectus, known as a red herring prospectus, during the initial quiet period.

The red herring prospectus is so named because of a bold red warning statement printed on its front cover.

The warning states that the offering information is incomplete, and may be changed.

The actual wording can vary, although most roughly follow the format exhibited on the Facebook IPO red herring.

During the quiet period, the shares cannot be offered for sale.

Brokers can, however, take indications of interest from their clients.

At the time of the stock launch, after the Registration Statement has become effective, indications of interest can be converted to buy orders, at the discretion of the buyer.

Sales can only be made through a final prospectus cleared by the Securities and Exchange Commission.