The Securities Act of 1933 generally requires companies issuing new securities (including stocks or bonds) to file a Registration Statement with the Securities Exchange Commission (SEC) before they can raise capital from the public. All Registration Statements must include a prospectus. What Is A Prospectus? A prospectus is the legal offering or selling document. It contains important facts about the company¿s business operations, financial condition, and management. Everyone who buys the new securities or has made an offer to purchase them must be allowed access to the prospectus. Are There Any Documents That Are Not Typically Included In A Prospectus?A prospectus typically does not have to include: - Copies of underwriting agreements
- Opinions of counsel about the company
- Copies of material contracts
- Articles of incorporation and bylaws
- Copies of underlying agreements relating to the offered securities
Why Is A Prospectus Important?A prospectus enables new investors to have full disclosure of all "material facts" they might find important in making an investment decision. Investors typically rely on the prospectus to be accurate when deciding whether to invest in the company. What Happens If A Prospectus Contains False Or Misleading Information?
The issuing company, its key officers and directors, and any experts named in the Registration Statement (such as accountants) are liable for any false statements of material facts or misleading omissions contained in the prospectus. You may have a right to recover your money from the issuing company and its controlling people if you rely on a factually inaccurate prospectus to make an investment. I Have Lost Money In An Investment Because Of A False Prospectus ¿ Do I Need An Attorney?
If you lose money because you relied on a company¿s prospectus (which later turned out to contain false information) in making a decision to invest with them, you will want to consult with an attorney to protect your rights. An attorney knowledgeable in securities law can advise you whether there is the possibility of recovering your money. Under some circumstances the attorney may also be able to represent you and other persons who have also been defrauded in a class action. |
