A U.S. IPO runs on a registration statement (Form S-1, or Form F-1 for foreign private issuers) that the SEC staff reviews, often nonpublicly at first, through rounds of comment letters. Federal "gun-jumping" rules restrict offers before filing and limit written offers afterward, while underwriters build an order book, price the deal, may stabilize trading under Regulation M, and typically bind insiders to lock-ups of about 180 days.
In this lesson you will
- Describe the structure of a registration statement and when Form S-1 or Form F-1 applies
- Explain how confidential draft submissions and SEC comment letters work, including public-filing deadlines
- Define gun-jumping and the communication limits in each phase of an offering
- Explain bookbuilding, pricing, overallotment and stabilization, and lock-up agreements
The registration statement
A registration statement has two parts: Part I is the prospectus, the legal offering document delivered to investors, and Part II contains additional information and exhibits filed with the SEC but not delivered [1]. The prospectus must describe the business, financial condition, results of operations, risk factors, and management, and must include audited financial statements [1]. Any company may use Form S-1; non-financial disclosure follows Regulation S-K and financial statements follow Regulation S-X [1]. Form F-1 is the registration form for securities of foreign private issuers for which no other form is authorized [2].
Amendments to Form S-1 are filed as S-1/A and are publicly available on EDGAR, and after effectiveness the company typically files a final prospectus, usually identified as a 424B3 or 424B4 filing, that adds the final offering price [6].
Confidential draft submissions
The JOBS Act of 2012 let emerging growth companies submit a draft IPO registration statement for confidential, nonpublic staff review, and in 2017 the SEC staff began accepting voluntary draft submissions from all issuers [5]. The staff reviews those drafts nonpublicly as long as the issuer confirms it will publicly file its registration statement and prior drafts at least 15 days before any road show or, if there is no road show, at least 15 days before the requested effective date [5]. On March 3, 2025, the Division of Corporation Finance expanded these accommodations, including letting issuers omit underwriter names from the initial draft and allowing nonpublic review of later offerings regardless of how long the issuer has been reporting [5].
SEC review and comment letters
The Division of Corporation Finance concentrates its reviews on disclosure that appears to conflict with SEC rules or accounting standards, or that appears materially deficient in explanation or clarity, and it does not evaluate the merits of any transaction [3]. Staff comments may ask a company to provide supplemental information, revise disclosure, or add disclosure [3]. For IPOs, the review often results in revisions to the prospectus, and once comments are addressed the staff issues an order declaring the registration statement effective [6]. Comment letters and company responses are released on EDGAR no earlier than 20 business days after the registration statement becomes effective [5].
The quiet period and gun-jumping
Section 5 of the Securities Act divides an offering into phases. Before a registration statement is filed, Section 5(c) prohibits offers, and the term "offer" is read broadly enough that publicity which conditions the market can count [4]. Between filing and effectiveness, written offers are limited to a statutory prospectus meeting Section 10, so the preliminary prospectus is the only permitted written offering material outside of other rules and exemptions [4]. Violations of these restrictions are generally called "gun jumping" [4]. The period of restricted communication around an offering is what practitioners informally call the quiet period.
The SEC's 2005 Securities Offering Reform loosened these rules in several ways, including a bright-line exclusion for issuer communications made more than 30 days before filing, subject to conditions that include not referencing the securities offering and being made by or on behalf of the issuer [4]. Lesson 3 covers the later test-the-waters rules in detail.
Bookbuilding and pricing
Underwriters collect indications of interest, and the compilation of those indications, showing how many shares each investor would buy and at what price, is the order book [6]. The SEC describes the offering price as a negotiated estimate reached by the company and underwriters through a mix of market conditions, analysis, and negotiation [6]. The bulletin notes the competing incentives: a higher price raises more capital, but underwriters also want a price attractive to their investor clients, and underpricing can produce a first-day jump that benefits buyers more than the company [6].
Overallotment, the greenshoe, and stabilization
Underwriting agreements commonly give the syndicate an option to buy additional shares from the issuer, often called the greenshoe or overallotment option. Underwriters typically sell more shares than the base deal, creating a short position that they close either by exercising the option or by buying in the market. Regulation M defines a syndicate covering transaction as a bid or purchase on behalf of the syndicate to reduce a short position created in connection with the offering [8]. Regulation M also permits stabilizing only to prevent or retard a decline in the market price, and no stabilizing bid may exceed the lower of the offering price or the stabilizing bid in the principal market [7]. The SEC's investor bulletin warns that once underwriter support ends, the stock price may decline significantly [6].
Lock-ups and overhang
Existing shareholders often agree not to sell for a set period after the IPO, typically 180 days [6]. Shares that are outstanding but cannot yet trade are sometimes called the market overhang, and when lock-ups expire the price may fall significantly if many shares become available at once [6]. A prospectus discloses these shares under a caption such as "Shares Eligible for Future Sale" [6].
- Pre-filing: organize, draft, consider confidential submission; offers prohibited except under exemptions.
- Waiting period: public filing at least 15 days before the road show if drafts were confidential; written offers limited to the preliminary prospectus and permitted materials.
- Effectiveness and pricing: order book closes, price is set, final prospectus is filed.
- Aftermarket: possible stabilization and covering, then lock-up expiry.
Key terms
- Form S-1
- The basic Securities Act registration form any company may use, including for an IPO.
- Form F-1
- The Securities Act registration form for foreign private issuers when no other form is authorized.
- Draft registration statement (DRS)
- A registration statement submitted for nonpublic SEC staff review before public filing; IPO drafts must be made public at least 15 days before the road show.
- Comment letter
- Written SEC staff feedback asking a company to explain, revise, or add disclosure; released on EDGAR no earlier than 20 business days after effectiveness.
- Gun jumping
- Violating Section 5 limits on offers before filing or on written offers before and after effectiveness.
- Order book
- The underwriters' compilation of investor indications of interest, including share amounts and prices.
- Syndicate covering transaction
- Under Regulation M, a bid or purchase by the syndicate to reduce a short position created in the offering.
- Lock-up agreement
- A contractual promise by existing shareholders not to sell for a period after the IPO, typically 180 days.
Check your understanding
Sources
- [1]U.S. Securities and Exchange Commission, “What is a Registration Statement?,” June 21, 2024.
- [2]U.S. Securities and Exchange Commission, “Form F-1 Registration Statement Under the Securities Act of 1933,” Accessed November 2026.
- [3]U.S. Securities and Exchange Commission, Division of Corporation Finance, “Filing Review Process,” September 27, 2019.
- [4]U.S. Securities and Exchange Commission, “Securities Offering Reform (Release No. 33-8591),” July 19, 2005.
- [5]U.S. Securities and Exchange Commission, Division of Corporation Finance, “Enhanced Accommodations for Issuers Submitting Draft Registration Statements,” March 3, 2025.
- [6]U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, “Investor Bulletin: Investing in an IPO,” Accessed November 2026.
- [7]Electronic Code of Federal Regulations (eCFR), “17 CFR 242.104 — Stabilizing and other activities in connection with an offering,” Accessed November 2026.
- [8]Electronic Code of Federal Regulations (eCFR), “17 CFR 242.100 — Definitions (Regulation M),” Accessed November 2026.
Educational content only — not legal, tax, or investment advice, or an offer to sell or a solicitation of an offer to buy any security. Rules and data are described as of November 2026 and may change. Securities offered through Umergence LLC, Member FINRA/SIPC.