Shhh. Please Do Not Disturb the Quiet Period

Everybody loves to talk about initial public offerings, the financing event that's becoming as American as motherhood and apple pie. But relatively few understand the ins and outs of IPOs, particularly the so-called quiet period -- that ill-defined space of time when companies issuing shares to the public must keep their lips zipped about their financial activities.

Mindful that its customers often don't understand the murky rules, news release distributor PR Newswire sponsored a panel discussion at Manhattan's International Toy Building earlier in the week to clear up the muddle. Given my role in shining the light on Webvan's (WBVN Quote) not-so-quiet quiet period, the publicist's group invited me to join the panel, which included securities lawyer Karen Dempsey of Pillsbury Madison & Sutro in San Francisco. Dempsey presented such a clear definition of the quiet period -- which I embellished by pointing out how companies routinely violate the rules -- that it seemed instructive to reproduce the list here, with commentary.

As Dempsey explains, there are three distinct phases of a quiet period. The purpose of each phase is to prevent companies from hyping their stocks at a time when investors haven't had an opportunity to digest fully the company's filings with the Securities and Exchange Commission. Violation of any of the phases can get a company in hot water with the SEC, a career-limiting event for lawyers, bankers and the executives involved. ...