Series 79 practice questioneasyLock-Up Agreements
What is the standard lock-up period for company insiders in a typical IPO?
- A30 days
- B90 days
- C180 days✓ Correct answer
- D365 days
Explanation
Why C — 180 days
The standard lock-up period for company insiders (officers, directors, and significant shareholders) following an IPO is 180 days (approximately six months). During this period, insiders are contractually prohibited from selling their shares without the consent of the lead underwriter. The lock-up agreement is not an SEC requirement but rather a market convention designed to prevent a flood of insider selling immediately after the IPO that could depress the stock price.
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