Red Herring
Content
Definition
A Red Herring is a preliminary prospectus filed by a company with the SEC, usually in connection with its initial public offering (IPO), containing information about the business and its finances.
Usage and Context
A red herring is a draft document submitted before an IPO that outlines a company’s business and financial status.
Frequently asked questions
- What is meant by a red herring prospectus? A red herring prospectus is an initial document filed during an IPO that outlines key offering details but excludes final pricing and share amounts.
- Does the SEC approve a red herring? No, a red herring is a draft prospectus filed with the SEC during an IPO; it is reviewed, not approved.
- What is the preliminary prospectus of the SEC? A preliminary prospectus, or red herring, is an initial document filed with the SEC by a company planning to go public.
Benefits
A red herring is a preliminary document filed with the SEC before an IPO, detailing business and finances.
Conclusion
A red herring gives key details about a company before it goes public.
