Series 79 practice questionhardIPO Process
During the roadshow for a U.S. IPO, a senior executive provides new, material nonpublic information to select institutional investors not included in the registration statement. Which of the following is the correct course of action?
- AThe information can be ignored if the investors are sophisticated.
- BThe registration statement must be withdrawn and refiled.
- CThe company must file a new S-1 immediately.
- DPrompt FWP or prospectus supplement to disclose the information to all investors✓ Correct answer
Explanation
Why D — Prompt FWP or prospectus supplement to disclose the information to all investors
Material information must be disclosed to all potential investors, often via a prospectus supplement or FWP. The trap is thinking selective disclosure is allowed for sophisticated investors, which is prohibited.
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