This guide provides a comprehensive comparison between Free Writing Prospectuses (FWP) and Testing-the-Waters (TTW) communications. While these investor presentations often look identical, they operate under distinct legal frameworks that impact your filing requirements and confidentiality.
Executive Summary: FWP vs. TTW
In the context of IPOs and follow-on offerings, communications generally fall into two categories: Rule 433 (FWP) or Rule 163B (TTW). The primary differences lie in audience eligibility, timing, and public filing risks.
Key Similarities
- Purpose: Both serve as written investor-facing materials to market a registered offering.
- Standards: Both require robust diligence and must comply with antifraud principles; all statements must be accurate and supportable.
Compliance Checklist for Rule 163B TTW
To ensure a presentation remains a protected TTW communication and does not accidentally become a public FWP, implement these controls:
- Eligibility Verification: Use invite-only lists and document the basis for believing recipients are QIBs or IAIs.
- Closed Sessions: Host meetings in private rooms; avoid open conference sessions.
- No Public Links: Prohibit QR codes, website postings, or booth handouts.
- Gated Delivery: Distribute via restricted portals or individual emails; use watermarking.
- Clear Legends: Include a “Confidential TTW” legend restricting further distribution. Recordkeeping: Maintain a log of every recipient, date, and deck version used.
Frequently Asked Questions
Is a TTW deck automatically an FWP?
No. Rule 163B is a separate safe harbor. However, if those same slides are distributed to a general audience, they may lose protection and trigger FWP filing requirements.
Why are FWPs risky during a confidential S-1?
Because Rule 433 requires certain FWPs to be filed publicly on EDGAR. If you are trying to keep your IPO plans quiet, a public FWP filing would undermine that confidentiality.
Does TTW allow the use of financial projections?
Rule 163B does not explicitly ban them, but projections increase liability and require heavy diligence and backup support.
This securities law blog post is provided as a general informational service. If you have any questions about this article, Hamilton & Associates Law Group, P.A. is ready to help.
Since 1998, our Founder, Brenda Hamilton, has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
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Brenda Hamilton, Securities Attorney
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Boca Raton, Florida 33432
Telephone: (561) 416-8956
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