slang term for a preliminary prospectus that outlines the important features of a new issue. This prospectus contains no selling price information or offering date. It is so named because of the stamped red-ink statement on the first page telling the reader that the document is not an official offer to sell the securities. Once the registration statement is approved by the SEC, the offering circular, the final, statutory prospectus, is printed and the security can be offered for sale.
cautionary statement, printed in red, on the first page of a preliminary prospectus. It states that the document is not an offer to sell, but contains the required public disclosures.
a proposed prospectus that has not been approved by the Securities and Exchange Commission (SEC) or state securities commission.
Example: A red herring is shown in Table 45.
| TABLE 45 |
| RED HERRING PROSPECTUS |
| Proposed Prospectus |
| A registration statement has been filed with the Securities and Exchange Commission but is subject to change. The securities described herein may not be sold until approval becomes effective. |
