Quiet Period
A restricted period before or after an IPO during which company insiders and underwriters are limited in what they may publicly say about the company or its securities.
What is Quiet Period?
A quiet period is a regulatory restriction on communications by companies and their underwriters around a securities offering. The SEC's quiet period begins when a company files a registration statement for an IPO and ends 40 days after the offering (for reporting companies) or 25 days (for IPOs on major exchanges under certain conditions). During this window, company executives, underwriters, and their affiliates are prohibited from making public statements that could be seen as hyping the stock beyond what is contained in the prospectus. A second quiet period applies to public companies before they release quarterly earnings — during which management avoids selective disclosures that could advantage certain investors over others. Violations can result in SEC enforcement actions, civil penalties, and reputational damage.
Example
When Airbnb filed for its IPO in November 2020, its executives and bankers entered a quiet period during which they could not make bullish public statements beyond the prospectus. After the IPO priced in December and the 40-day quiet period ended, underwriter analysts were permitted to publish their initial equity research reports and price targets.