SEC Rule 164

Overview and Regulatory Purpose

Section 5(b)(1) of the Securities Act prohibits the use of any prospectus unless it meets the requirements of Section 10. Section 2(a)(10) defines prospectus broadly to encompass any written offer — any written communication that offers a security for sale or confirms the sale of a security.

In the offering process, virtually any written communication that mentions the securities being offered and discusses their terms or the issuer's business constitutes a prospectus within this statutory definition, and therefore can only be transmitted to investors if it satisfies Section 10's requirements for a statutory prospectus.

Before the 2005 Securities Offering Reform introduced the free writing prospectus framework, this requirement severely restricted the flexibility of written communications during a registered offering — issuers and underwriters could transmit only the statutory preliminary or final prospectus as the primary written offering document, supplemented by the very limited communications permitted under Rule 134's tombstone advertisement framework.

The 2005 Securities Offering Reform recognised that the rigid statutory prospectus requirement was inconsistent with modern securities market practice, in which institutional and sophisticated investors expect issuers and underwriters to communicate with them through a wide variety of formats — term sheets, investor presentations, Bloomberg messages, deal-specific brochures, and numerous other written formats — that are not adaptable to the rigid content requirements of the Section 10 statutory prospectus. 

Rule 164 addresses this mismatch by providing a mechanism through which flexible, formatted written communications can be transmitted to investors during the post-filing offering period, provided they satisfy Rule 433's specific conditions and the issuer is not an ineligible issuer — effectively treating Rule 433-compliant free writing prospectuses as Section 10(b) prospectuses for Section 5(b)(1) purposes without requiring them to satisfy the full content requirements of Section 10(a)'s statutory prospectus standard.

Statutory Authority and Rulemaking History

Rule 164 derives its statutory authority from Section 10(b) of the Securities Act of 1933, which authorises the Commission to prescribe the terms and conditions under which prospectuses not meeting the requirements of Section 10(a) may be used for purposes of Section 5(b)(1). 

This specific and targeted statutory authority for prescribing conditions under which non-statutory prospectuses may satisfy Section 5(b)(1) is the direct legislative basis for Rule 164's mechanism of treating Rule 433-compliant free writing prospectuses as Section 10(b) prospectuses without requiring full Section 10(a) statutory prospectus content.

Rule 164 was adopted August 3, 2005 — Securities Act Release No. 33-8591, the comprehensive Securities Offering Reform rulemaking — simultaneously with Rule 433 and the broader suite of offering communication reforms. 

The rule was amended June 1, 2020 — 85 FR 33352 — as part of the Commission's Exempt Offering Framework rulemaking, which made conforming adjustments to Rule 164's eligibility provisions without altering the rule's fundamental mechanism. No further substantive amendments have been adopted through June 2026.

Key Provisions and Operative Requirements

Rule 164(a) establishes the foundational legal mechanism. In connection with a registered offering of an issuer meeting the requirements of the section, a free writing prospectus, as defined in Rule 405, of the issuer or any other offering participant — including any underwriter or dealer — after the filing of the registration statement will be a Section 10(b) prospectus for purposes of Section 5(b)(1) of the Act, provided that the conditions set forth in Rule 433 are satisfied. This provision resolves the fundamental Section 5(b)(1) problem for free writing prospectuses in a single sentence: a free writing prospectus that satisfies Rule 433's conditions is treated as a compliant Section 10(b) prospectus, and therefore its transmission does not violate Section 5(b)(1)'s prohibition on transmitting non-statutory prospectuses. 

The mechanism applies to free writing prospectuses of the issuer and every other offering participant — underwriters, dealers, and any other person participating in the offering's distribution — making it the universal post-filing communications authority for the entire offering team.

Rule 164(b) provides the good faith cure for immaterial or unintentional failures to comply with Rule 433's filing conditions. An immaterial or unintentional failure to file, or delay in filing, a free writing prospectus as necessary to satisfy the filing conditions contained in Rule 433 will not result in a violation of Section 5(b)(1) or the loss of the ability to rely on Rule 164, provided two conditions are met: a good faith and reasonable effort was made to comply with the filing condition, and the free writing prospectus is filed as soon as practicable after the discovery of the failure to file. 

This cure provision directly addresses the operational reality of modern offering processes, in which the timing and coordination of filing obligations across multiple offering participants — issuers, book-running underwriters, co-managers, and their respective legal counsel — creates practical risk that an individual filing obligation may be overlooked or delayed in the intensity of the offering execution process. 

The availability of the good faith cure prevents isolated, immaterial filing delays from converting an otherwise compliant free writing prospectus into a Section 5 violation, while preserving the incentive to file promptly by requiring that any delayed filing occur as soon as practicable after discovery.

Rule 164(c) provides the parallel good faith cure for immaterial or unintentional failures to include the required legend in a free writing prospectus. Where a free writing prospectus was transmitted without the required Rule 433 legend through an immaterial error or unintentional omission, no Section 5(b)(1) violation results if a good faith and reasonable effort was made to comply, the free writing prospectus is amended to include the correct legend as soon as practicable after discovery of the omitted legend, and — where the free writing prospectus without the legend has already been transmitted — the corrected, legended free writing prospectus is retransmitted by substantially the same means to substantially the same prospective purchasers. 

This retransmission requirement ensures that the legend's investor protection function — directing recipients to the statutory prospectus and alerting them to the free writing prospectus's character as a supplementary offering document — is not permanently lost through an inadvertent omission.

Rule 164(d) provides a separate good faith cure for immaterial or unintentional failures to retain a free writing prospectus as required by Rule 433's record retention conditions, confirming that an isolated retention failure does not void the Section 10(b) prospectus status of an otherwise compliant free writing prospectus, subject to the same good faith compliance effort requirement applicable to the filing and legend cures.

Rule 164(e) establishes the ineligible issuer restriction — the provision that limits free writing prospectus availability to eligible issuers. Rule 164 and Rule 433 are available only if, at the eligibility determination date for the offering, the issuer is not an ineligible issuer as defined in Rule 405. 

An offering participant other than the issuer — an underwriter or dealer — may use a free writing prospectus if it has a reasonable belief that the issuer is not an ineligible issuer, shifting the participant-level analysis from certainty to a reasonable belief standard that acknowledges the practical limits of third-party knowledge of an issuer's eligibility status.

The ineligible issuer definition under Rule 405 encompasses a specific list of categories of issuers whose offering communications are subject to heightened restriction: blank check companies as defined in Rule 419; shell companies other than business combination related shell companies as defined in Rule 405; issuers whose Exchange Act periodic reports are not current during the past 12 months; issuers that have been convicted of certain crimes or have violated the antifraud provisions of the federal securities laws during the past three years; and certain other categories of issuers with elevated compliance concerns. 

The Commission may waive ineligible issuer status for specific issuers in appropriate circumstances, recognising that the categorical ineligibility determinations may occasionally produce results inconsistent with the underlying investor protection rationale in specific factual contexts.

Rule 164(e)(2) provides a limited accommodation for ineligible issuers that are not blank check, penny stock, or shell companies: such ineligible issuers may nonetheless use a free writing prospectus that contains no more than a description of the terms of the securities and the offering. This limited accommodation allows partially ineligible issuers to communicate with investors through a preliminary term sheet describing basic offering terms — price, amount, maturity, coupon, and similar economic terms — even though their ineligible issuer status prevents them from using the full free writing prospectus flexibility available to eligible issuers.

Rule 164(f) and Rule 164(g) establish the categorical exclusions from free writing prospectus availability. Rule 164(f) provides that Rule 164 and Rule 433 are not available if the issuer is registering a business combination transaction as defined in Rule 165(f)(1) — the specific business combination transaction category that is separately governed by Rule 165's offering communications framework and that requires compliance with Rule 425's specialised filing conditions for business combination communications rather than Rule 433's standard free writing prospectus conditions. 

Rule 164(g) provides that Rule 164 and Rule 433 are not available if the issuer, other than a well-known seasoned issuer, is registering an offering on Form S-8 — the registration form for employee benefit plan securities, whose offering communications are subject to specific constraints reflecting the employment relationship context in which Form S-8 securities are offered.

Rule 164(h) establishes the critical eligibility determination date for the ineligible issuer analysis. For most offerings, the determination date is the time of filing of the registration statement covering the offering. For shelf offerings registered pursuant to Rule 415, the determination date is the earliest time after the filing of the registration statement at which the issuer, or in an underwritten offering the issuer or another offering participant, makes a bona fide offer — including through a free writing prospectus — in the offering. This Rule 415 determination date is of significant commercial consequence for shelf issuers, since it means that an issuer's eligibility status is assessed not at the time the shelf registration statement is filed — which may be months or years before any actual takedown — but at the time the first bona fide offer in a specific takedown is made, ensuring that the eligibility analysis reflects the issuer's status at the moment that the free writing prospectus communications activity commences for the specific offering.

Scope of Application

Rule 164 applies to all registered offerings by eligible issuers after the filing of a registration statement, encompassing IPOs, follow-on offerings, shelf takedowns, exchange offers and other registered transactions that are not business combination transactions subject to Rule 165. 

The rule applies to free writing prospectuses of the issuer and every other offering participant — including all members of the underwriting syndicate, selling group broker-dealers, and any other persons participating in the distribution of the registered securities.

The eligibility framework creates a differentiated landscape for free writing prospectus use. WKSIs and other fully eligible issuers may use the complete free writing prospectus framework, with the only constraints being the specific conditions of Rule 433. 

Ineligible issuers that are not blank check, penny stock, or shell companies may use the limited preliminary term sheet accommodation of Rule 164(e)(2). Blank check companies, penny stock issuers, and shell companies may not use free writing prospectuses at all, reflecting the Commission's determination that these categories of issuer present the highest risk of investor harm from flexible, formatted marketing communications that are not subject to the full disclosure and review process of the statutory prospectus.

Relationship to Related Rules and Regulations

Rule 164's operational relationship with Rule 433 is the most fundamental in the free writing prospectus framework — the two rules function as a single integrated package. Rule 164 provides the statutory mechanism — the Section 10(b) prospectus designation — and Rule 433 provides the substantive conditions that must be satisfied to obtain that designation. 

Neither rule functions independently: a free writing prospectus that satisfies all of Rule 433's conditions but is not transmitted after the filing of a registration statement cannot benefit from Rule 164's Section 10(b) designation, and a free writing prospectus transmitted after the registration statement filing but without satisfying Rule 433's conditions remains a non-statutory prospectus that violates Section 5(b)(1).

Rule 164's relationship with Rule 163 defines the complete free writing prospectus communications timeline. Rule 163 governs pre-filing communications by WKSIs — exempting such communications from Section 5(c)'s pre-filing prohibition on offers — while Rule 164 governs post-filing communications by all eligible issuers and their offering participants. 

The WKSI that has conducted pre-filing communications under Rule 163 transitions to the Rule 164 framework when its registration statement is filed, with the pre-filing Rule 163 free writing prospectuses becoming subject to the post-filing obligation to file them with the Commission pursuant to Rule 163(b)(2).

Rule 164's exclusion of business combination transactions directly connects to Rule 165, which provides the specialised free writing prospectus framework applicable to those transactions, and to Rule 425, which governs the filing of written communications in connection with business combination transactions. 

The categorical exclusion in Rule 164(f) reflects the Commission's determination that the unique characteristics and investor protection concerns of merger and acquisition transactions warrant a dedicated communications framework rather than incorporation into the general registered offering free writing prospectus structure.

The Section 11 and Section 12(a)(2) liability implications of free writing prospectuses used in reliance on Rule 164 connect directly to Rule 159's time-of-sale principle. A material misstatement or omission in a free writing prospectus that is conveyed to investors before the time of the contract of sale will form part of the information package against which Section 12(a)(2) liability is assessed, regardless of whether the final statutory prospectus subsequently corrects the misstatement — a consequence that places premium importance on the accuracy and completeness of pre-sale free writing prospectuses in the offering process.

Amendment History and Regulatory Evolution

Rule 164's operative framework has been stable since its 2005 adoption, with the June 2020 amendment making conforming adjustments without altering the rule's fundamental mechanism. 

The 2025 structured products practice report noted in January 2026 that best practices for Rule 164 compliance now include same-day filing for both pricing supplements and free writing prospectuses to support electronic dissemination, and careful eligibility assessment before opting for a free writing prospectus over a traditional pricing supplement for ineligible issuers.

The May 2026 Registered Offering Reform proposal — which would expand Form S-3 eligibility and extend certain WKSI-equivalent benefits to Exchange Listed Issuers — would, if adopted, expand the population of issuers for whom Rule 164's full free writing prospectus framework is available, since the rule's eligibility conditions are tethered to the same issuer qualification standards that determine Form S-3 eligibility and WKSI status.

Enforcement Context and SEC Action Patterns

Rule 164 enforcement arises primarily through the Division of Corporation Finance's review of free writing prospectuses filed pursuant to Rule 433, where the Division identifies potential eligibility issues, legend deficiencies, or filing timing failures that implicate Rule 164's conditions. 

The Commission has brought enforcement actions against offering participants that used free writing prospectuses in connection with offerings by ineligible issuers — treating the resulting Section 5(b)(1) violation as a strict liability matter independent of the offering participant's knowledge of the issuer's ineligible status where the participant failed to satisfy Rule 164(e)'s reasonable belief standard.

Examination Relevance and Key Takeaways

Rule 164 is examined at the Series 7 and Series 65 levels as the legal mechanism enabling post-filing free writing prospectus use in registered offerings. The foundational mechanism — a Rule 433-compliant free writing prospectus is treated as a Section 10(b) prospectus for Section 5(b)(1) purposes — is the primary examination concept. 

The ineligible issuer restriction, the limited preliminary term sheet accommodation for non-blank-check ineligible issuers, and the exclusion of business combination transactions and non-WKSI Form S-8 offerings are consistently examined limitations. The good faith cure provisions for filing, legend, and retention failures — available where good faith and reasonable efforts to comply were made — are examined as practical accommodations for the operational complexity of the offering process.

The key points to retain are these. Rule 164 provides that a free writing prospectus — as defined in Rule 405 — used after the filing of a registration statement will be a Section 10(b) prospectus for Section 5(b)(1) purposes, enabling its transmission to investors without violating the Securities Act, provided the conditions of Rule 433 are satisfied.

The rule is unavailable to ineligible issuers as defined in Rule 405, except that non-blank-check, non-shell ineligible issuers may use free writing prospectuses limited to descriptions of securities terms and offering terms. Business combination transactions subject to Rule 165 and non-WKSI Form S-8 offerings are categorically excluded. Immaterial or unintentional failures to file, include legends, or retain free writing prospectuses are curable through good faith compliance efforts followed by prompt remediation. 

The eligibility determination date for shelf offerings is the earliest time after registration statement filing at which a bona fide offer is made in the specific offering, rather than the registration statement filing date. Rule 164 was last amended June 1, 2020 and no further amendments are pending through June 2026.