An IPO quiet period restricts what a company can say about its stock before and during a public offering. Federal law does not define the term, but the SEC's Investor.gov glossary says it lasts, at a minimum, from the filing of a registration statement until the SEC declares it effective. A company can keep releasing ordinary factual business news. Anything that could generate public interest in its stock can count as an offer the law restricts.
What is the IPO quiet period and when does it start?
The IPO quiet period is the part of a securities offering when a company's public communications are tightly limited, and the term has no formal legal definition. The SEC's Investor.gov glossary says the period lasts, at a minimum, from the time a company files a registration statement until SEC staff declare it effective.
Cornell's Legal Information Institute uses the same label for the pre-filing period that comes before the filing. Section 5(c) of the Securities Act bars any "offer" to sell securities at that stage, and Section 2(a)(3) defines an offer as any communication that may condition the market for the sale.
Investor.gov adds that the SEC and courts have read "offer" broadly, to include communications that might generate public interest in a company or its securities. That reading explains why a flattering interview that never mentions the offering can still cause trouble, a point the Google case below makes concrete.
What can a company still say before it lists?
A company can still say four kinds of things during an IPO process: regularly released factual business information, communications made more than 30 days before filing, a limited notice of the offering, and testing-the-waters talks with certain institutional investors. The table sets out each one and where the rule comes from.
| Allowed communication | What the rule permits | Source |
|---|---|---|
| Regular business news (Rules 168 and 169) | The company can continue to announce regularly released factual business information | Cornell Legal Information Institute |
| Early communications (Rule 163A) | Any communication made more than 30 days before filing, if the company makes it and it does not refer to the offering | Cornell Legal Information Institute |
| Offering notice (Rule 135) | An announcement limited to the company's name, the amount and basic terms of the securities, the expected timing and a brief statement of the manner and purpose of the offering | Cornell Legal Information Institute |
| Testing the waters (Rule 163B) | Oral or written talks with qualified institutional buyers and institutional accredited investors, before or after filing | Vedder Price summary |
Each rule carries conditions that securities counsel has to check against the facts, so the table is a map and not permission. Rule 163B is the newest of the four. According to Vedder Price, the SEC adopted it on September 25, 2019, and the relief it gives all issuers had previously been available only to emerging growth companies.
Once regular announcements are cleared, the format matters too. The guide to media advisory versus press release explains when each one fits.
What is gun jumping and what can it cost a company?
Gun jumping is the term the SEC uses for offering-related communications that fail to comply with the limits on offers, according to Investor.gov. As the Google case below shows, the label can reach an interview that never mentions the offering.
A law firm summary on Lawcast's gun-jumping guide lists what the SEC can do in response. It can require a revised prospectus, require the company to offer to buy back stock it has already issued, delay the offering for a cooling-off period, or begin enforcement proceedings seeking injunctions and monetary penalties.
For a communications team, the cheapest fix is the one made before an interview runs.
What did Google's Playboy interview teach about quiet periods?
Google's 2004 Playboy interview taught companies that an interview with no mention of the offering can still be treated as a violation. Google co-founders Sergey Brin and Larry Page gave the interview ahead of the company's 2004 IPO.
According to Lawcast, the interview did not mention the offering or the company's securities, yet the SEC determined that it amounted to gun jumping. The SEC required Google to add a risk factor warning that the interview may have violated Section 5, to include the full text of the article in the prospectus, and to address discrepancies between the article's statistics and the prospectus.
The Corporate Counsel blog reported in August 2004 that Google filed Amendment No. 7 to its Form S-1 with the interview attached as Appendix B, along with three corrections. The same post noted the interview was conducted in April, just before the original filing.
Salesforce faced a similar problem that year. Reuters reported on quiet-period mistakes that Salesforce CEO Marc Benioff let a New York Times reporter follow him for a day, acknowledged the interview broke SEC rules, and saw the company delay its 2004 IPO by a month.
Two lessons follow. An interview recorded before filing can be published after the process begins, so publication dates matter as much as recording dates. And favorable commentary about a company's prospects is the kind of statement counsel should review, whether or not the offering is mentioned.
How should a PR team plan around the quiet period?
A PR team should plan around the quiet period by controlling three things: who speaks, what gets published, and which older material can resurface. Five steps put that into practice.
- Send every interview, podcast and conference request to securities counsel before anyone replies. The SEC reads "offer" broadly, so the test is whether a statement could generate interest in the stock, not whether it names the offering.
- Keep regular business announcements on the same schedule and in the same channels. Rules 168 and 169 protect regularly released factual information, so changing the pattern removes the regular part that the protection depends on.
- Have counsel review executive social posts and speaking slides before they go out. The Google case shows that a favorable statement with no mention of the offering still drew SEC action.
- List every interview recorded before filing and check when each one will publish. Google's interview was conducted in April but surfaced while the offering was under way.
- Write one approved holding answer for inbound reporter questions, such as a statement that the company is not commenting beyond its regular business updates. The crisis statement template shows the same holding-statement structure.
Where can companies find IPO communications help?
Companies preparing to list should pair securities counsel with a communications team that knows the offering rules. 5W runs a SPACs and IPO PR practice and a pre-IPO financial communications practice. Disclosure: Ronn Torossian founded 5W.
For the wider field of banks, fintech and investor communications, the financial services PR guide covers trust data, SEC marketing rules and agency selection. The Silicon Valley Bank run lessons show how fast a financial firm's communications can matter in a crisis.
Frequently asked questions
How long does the IPO quiet period last?
The IPO quiet period lasts, at a minimum, from the time a company files a registration statement until SEC staff declare it effective, according to Investor.gov. Cornell's Legal Information Institute also applies the label to the pre-filing period, so securities counsel should confirm when the limits begin and end for a specific offering.
Can a CEO give interviews during an IPO?
A CEO should not give interviews during an IPO without approval from securities counsel. The Google and Salesforce cases from 2004 show that interviews can force prospectus changes or a delayed offering.
What is testing the waters?
Testing the waters means talking with potential investors to gauge interest in a possible offering. Under Rule 163B, adopted September 25, 2019, any issuer can do this with qualified institutional buyers and institutional accredited investors, according to Vedder Price.
Does a SPAC merger follow the same rules?
This guide covers traditional IPOs only. A SPAC merger raises separate questions, so a company should ask securities counsel before making any public statement about one.
This guide is general communications information, not legal advice. Securities counsel should approve every public statement made during an offering.