red herring

Red Herring

A preliminary registration statement that must be filed with the SEC describing a new issue of stock (IPO) and the prospects of the issuing company.

Notes:

There is no price or issue size stated in the red herring, and it is sometimes updated several times before being called the final prospectus. It is known as a red herring because it contains a passage in red that states the company is not attempting to sell their shares before the registration is approved by the SEC.

See also: Gun Jumping, IPO, Issuer, Prospectus, SEC, Tombstone, Underwriting

---

Red herring

A preliminary prospectus providing information required by the SEC. It excludes the offering price and the coupon of the new issue.

---

red herring

A prospectus that is given to potential investors in a new security issue before the selling price has been set and before the issuer's registration statement has been approved for accuracy and completeness by the SEC. This document, which provides details of the issue and facts concerning the issuer, is so named because of a statement on it, printed in red, that the issue has not yet been approved by the SEC. Also called preliminary prospectus.