Waiting Period

Waiting Period: Waiting period in finance refers to the time period that a company issuing a IPO (Initial Public Offering) must desist from revealing any information about the activities of the company or a related party that might cause an artificial inflation of the value of the stock. This period, also called cooling-off period, generally refers to the time period from when the company fills in a registration statement with the US SEC (Securities and Exchange Commission) and the SEC declares the statement to be effective.

This rule applies to board members, management and even the employees. While information in the public domain and normal company activity reports might still be published, revealing confidential information deemed to affect the price the of the stock might be an breach of insider trading laws.

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The logic behind the waiting period is to ensure a level playing field for all investors, equipped with the same information of the company when it goes public.

Edited and Updated 08th March 2014

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