Quiet Period

What it is:

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

How it works/Example:

Under the SEC rules, a company must not release information about its activities and related parties to the public after it makes its SEC registration filing for its initial public offering 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 a number of provisions of the quiet period and permitted companies to continue to publish information about the company electronically and to continue to publish and report company activities through normal company networks.

Why it Matters:

The quiet 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 hinder any potential interference with SEC efforts to evaluate its filings and the release of any information which 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.

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent.