Free Writing Prospectus (FWP)
Definition
A free writing prospectus (FWP) is any written communication that constitutes an offer under the Securities Act of 1933 and is made after a registration statement has been filed (or, for WKSIs, at any time). Unlike a traditional prospectus, an FWP need not meet all §10 prospectus requirements and can be used during the waiting period and post-effective period under specific conditions.
Elements / Requirements
Governed by Rules 163, 164, and 433:
Rule 433 conditions for eligible issuers:
- Legend: FWP must contain a legend referring investors to the registration statement and explaining how to obtain a copy;
- Filing: FWP must be filed with the SEC on or before the date of first use (or within the applicable timeframes);
- Accompaniment requirement (for non-reporting or unseasoned issuers): FWP must be preceded or accompanied by a preliminary prospectus (§10(b) prospectus);
- Consistency: FWP must not conflict with information in the registration statement or any SEC filing.
Issuer categories:
- Ineligible issuers: May not use FWPs (e.g., blank check companies, shell companies, convicted issuers).
- Non-reporting issuers / unseasoned issuers: May use FWP but must satisfy accompaniment requirement.
- Seasoned issuers (S-3 eligible): May use FWP without accompaniment requirement.
- WKSIs: May use FWP at any time — even before filing the registration statement (Rule 163).
Key Concepts
- FWP as a §10(b) prospectus: An FWP is deemed to be a prospectus that satisfies §5(b)(1) of the Securities Act for the period it is used.
- Road shows: Oral road shows are not FWPs. Written materials distributed at road shows may be FWPs requiring filing.
- Safe harbor for immaterial/unintentional failures: Rule 433(d) provides that immaterial or unintentional failures to file are excused if the issuer acts in good faith and promptly corrects the violation.
- Broker-dealer FWPs: Third-party FWPs (by underwriters) have additional requirements.
Policy / Rationale
- Modernizes the offering process to reflect how information actually flows in the marketplace (internet, electronic communications).
- Gives sophisticated issuers (WKSIs) flexibility to communicate with the market while maintaining baseline disclosure requirements.
- Preserves anti-fraud liability (§10(b) and Rule 10b-5 apply to FWPs) without imposing full prospectus requirements on all communications.