Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Waiting Period

What it is:

The waiting period refers to the time period between a company filing a registration statement with the US Securities and Exchange Commission (SEC) and the SEC declaring that statement to be effective. This is also referred to as the "quiet period."

How it works (Example):

Under the SEC rules, once a company makes its SEC registration filing for its initial public offering, it must not release information about its activities or related parties to the public until the SEC approves the registration for the offering.  The SEC interprets this rule broadly, even including board members, management, and employees talking about the company.

In 2005, the SEC changed many provisions of the waiting period and now allows companies to continue to publish information about themselves electronically and to continue to publish and report company activities through normal company networks.

Why it Matters:

The waiting period precedes the introduction of a company into the capital market.  During that time, the amount of public exposure and hype must be minimized to prevent any interference with SEC efforts to evaluate the company's filings. The release of any information may cause investors to "jump the gun" on valuations and expectations for the company.  The SEC's intention is to create a level playing field for all investors in the capital market, ensuring that all have the same information about the company when it goes out for sale on the market.

Related Terms View All
  • Enrolled Agent (EA)
    To become an EA, a person has to pass a three-part comprehensive IRS test of individual...
  • Par
    Let's assume Company XYZ issues $10 million in bonds to the public. It may do so by...
  • Speculation Index
    The AMEX tends to list riskier stocks issued by smaller companies that are starting up or...
  • Questioned Document Investigation
    Let's say John Doe dies and leaves behind a will giving everything to Sally Jones. Sally...
  • Minimum-Interest Rules
    Many companies and individuals make loans. These loans can occur in any amount and carry...