According to Securities and Exchange Commission (SEC) precedent and lore, preregistration offers to potential investors, generally known as "gun-jumping," may improperly prime the market for a securities offering.1 Such offers are illicit because Section 5 of the Securities Act of 1933 prohibits offers of securities prior to the time a registration statement covering the offering is filed with the SEC.2 Anti-solicitation rules were also imposed on private placements and analyst communications. If a private placement was generally advertised, it could no longer be classified as a private placement but instead became a public offering. Investment banks were subject to a "quiet period" with regard to research reports in advance of an initial public offering (IPO) or until 40 days after completion of an offering.
The Jumpstart Our Business Startups (JOBS) Act,3 passed on April 5, 2012, required the SEC to rethink all of these policies on solicitation and advertising in public securities offerings and in private placements. Some provisions of the JOBS Act with regard to solicitations became effective without SEC rulemaking. Other important provisions required rulemaking which was supposed to have been completed in July 2012, but final rules were not passed until July 2013.
