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After the effective date of a registration, an underwriter sends a prospective investor a one-page flyer summarizing the terms of an offering. Two days earlier, the underwriter sent the same investor a full final prospectus. Is it considered a prospectus??

A) Yes
B) No

User Renathy
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1 Answer

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Final answer:

A one-page flyer sent after a full final prospectus is considered a prospectus if it summarizes the terms of the offering and doesn't contain new substantive information. According to the Securities Act of 1933, a prospectus includes a wide range of written communications with certain requirements. The correct answer is A) Yes.

Step-by-step explanation:

When we talk about whether a one-page flyer sent by an underwriter qualifies as a prospectus, we're delving into securities law and investment regulations. Under the Securities Act of 1933, a prospectus is any advertisement, notice, circular, public letter, or communication, written or by radio or television, which offers any security for sale. However, there's a specific format and content that a prospectus must follow according to regulations set by the Securities and Exchange Commission (SEC).

In your scenario, the underwriter had already sent a full final prospectus two days earlier. This full final prospectus is the in-depth document that provides all necessary information about the offering, as required by the SEC. The one-page flyer, in this case, is likely to be a summary of the final prospectus. As long as the flyer does not contain information that contradicts or changes the information in the full final prospectus, it may be considered a 'summary prospectus' a shortened version allowed by the SEC.

For a definitive answer, if the one-page flyer merely summarizes the terms or even highlights information contained in the full final prospectus, and no new substantive information is included, it could be viewed as a part of the prospectus materials. Therefore, in relation to the question, the one-page flyer would be considered a prospectus. The correct answer is: A) Yes.

User Sjeiti
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