Preliminary Prospectus

The preliminary prospectus is a document initially prepared by the underwriter of a new issue of a publicly traded security. This legal disclosure provides buyers information relating to the objectives, terms, and risks of the public placement.

The preliminary prospectus can also help generate interest in the security and can increase potential valuation by reducing uncertainty with regard to the business plan associated with the underlying enterprise. This disclosure also protects the issuer from legal liabilities that may otherwise flow from nondisclosure of facts pertinent to the valuation of the security.

The preliminary prospectus does not substitute for the due diligence a buyer would exercise in their decision to purchase the security. While the price of traded securities is said to incorporate all market information (under the efficient market hypothesis), there is an important role of pre-issuance information for potential investors.

Since new issues typically attract experienced and diversified investors, the preliminary prospectus is considered but one piece of information as part of a more complete analysis of the potential market valuation of the new issue.

This preliminary prospectus informs potential investors awaiting the publication of the final prospectus, which is produced in advance of the issuance of the publicly traded security.

Preliminary Prospectus
Preliminary Prospectus