During the cooling-off period of an offering, which activity is allowed?

During the cooling-off period of an offering, soliciting indications of interest is an activity that is permitted. This period typically lasts for 20 days after the registration statement is filed with the SEC and is primarily a time for regulatory review. During this time, public communication is limited to prevent influencing potential investors before the offering becomes effective.

Soliciting indications of interest allows underwriters and the issuing company to gauge market interest in the security being offered without actually committing to a sale. This means they can collect feedback from potential investors regarding their interest in the offering, which can help determine demand and set the final pricing. Importantly, indications of interest are not binding; they do not generate a contract or guarantee participation once the offering goes effective.

In contrast, activities such as accepting orders, promising allocations, or accepting deposits are not permissible during the cooling-off period. These actions imply a commitment or agreement to purchase, which would violate regulations designed to ensure that potential investors have not yet been influenced or committed to an offering before it is properly registered and the final prospectus is available for review.