SEC Rule 168

Overview and Regulatory Purpose

The Securities Act's gun-jumping framework — the suite of restrictions that Section 5 imposes on offers and the use of prospectuses before and during the registration process — was designed to prevent issuers from conditioning the market for a forthcoming registered offering through informal communications that reach investors before the formal registration statement disclosure is available for review.

The framework reflects a sound and important investor protection principle: investors should make their decisions about whether to purchase registered securities based on the structured, balanced disclosure of the registration statement and prospectus, not on the basis of promotional communications designed to create favourable impressions of the issuer's prospects before the formal offering materials are available.

The practical challenge that Rule 168 addresses is that this laudable principle creates an unintended and unjustifiable disruption when applied to the ongoing investor communications that every public reporting company regularly conducts as a matter of ordinary corporate practice. 

A company that releases quarterly earnings, publishes annual reports, issues press releases about product launches, holds analyst days, and maintains an investor relations programme communicates with investors constantly, in formats that it has established over years of consistent practice, pursuant to obligations imposed by Exchange Act disclosure rules, listing standards, and the investor relations needs of a public company operating in competitive capital markets. 

The Securities Act's pre-1973 gun-jumping framework would have required all of this activity to cease or be dramatically curtailed whenever the company was planning, filing, or conducting a registered securities offering — a disruption whose costs to investors, to the company's stock price, and to the market's overall information environment would have been substantial and entirely unrelated to any genuine investor protection benefit.

Rule 168 resolves this tension by drawing a principled and operationally workable distinction between two categories of issuer communication: genuine ordinary course communications that have been regularly released in consistent formats and timing, and communications that have been crafted or modified to condition the market for a forthcoming offering. 

The first category receives safe harbour treatment under Rule 168 regardless of the offering process's status; the second remains subject to the Securities Act's gun-jumping restrictions. 

The three conditions of Rule 168(d) — prior release of the same type of information, consistent timing and manner, and issuer eligibility — are the mechanism through which this distinction is operationally implemented.

Statutory Authority and Rulemaking History

Rule 168 derives its statutory authority from Sections 2(a)(10) and 5(c) of the Securities Act of 1933 — the prospectus definition and the pre-filing offer prohibition from which the rule's safe harbour operates — and from the Commission's general exemptive rulemaking authority under Section 28 of the Act and Section 19(a)'s implementing rulemaking authority. 

The Commission's exemptive authority under Section 28 is the most directly relevant statutory basis, since Rule 168's safe harbour operates by designating specified categories of ordinary course communications as not constituting prospectuses or offers notwithstanding the broad statutory definitions of those terms.

Rule 168 was adopted August 3, 2005 — Securities Act Release No. 33-8591, the comprehensive Securities Offering Reform rulemaking — simultaneously with Rule 169, its companion rule for non-reporting issuers, and as part of the broader package of offering communication reforms that introduced the WKSI framework, the free writing prospectus framework, and the automatic shelf registration mechanism. 

Rule 168 was amended August 3, 2011 — 76 FR 46617 — to address technical adjustments, and June 1, 2020 — 85 FR 33352 — in the Exempt Offering Framework rulemaking to extend Rule 168's safe harbour to business development companies and registered closed-end funds, which had previously been excluded from the rule as registered investment companies under the Investment Company Act of 1940. 

The June 2020 amendment confirmed that registered closed-end funds and BDCs — which regularly publish factual business information and forward-looking information as part of their investor communications programmes — may rely on Rule 168 in the same manner as operating companies, provided the eligibility and regular release conditions are satisfied.

Key Provisions and Operative Requirements

Rule 168(a) establishes the foundational safe harbour. For purposes of Sections 2(a)(10) and 5(c) of the Act, the regular release or dissemination by or on behalf of an issuer of communications containing factual business information or forward-looking information, made in accordance with the conditions of Rule 168, shall be deemed not to constitute an offer to sell or offer for sale of a security by an issuer which is the subject of an offering pursuant to a registration statement that the issuer proposes to file, has filed, or that is effective. 

This formulation is significant in two respects: first, the safe harbour operates for purposes of both Section 2(a)(10)'s prospectus definition and Section 5(c)'s pre-filing offer prohibition simultaneously, providing comprehensive protection across the full temporal spectrum of the offering process; and second, the safe harbour applies regardless of whether the registration statement is proposed, pending, or effective — meaning the same communication enjoys the same protection throughout the offering lifecycle from the earliest contemplation of a registered offering through its completion.

Rule 168(a) specifies three categories of eligible issuers. The first and broadest category encompasses issuers that are required to file reports pursuant to Section 13(a) or Section 15(d) of the Exchange Act — the universe of domestic Exchange Act reporting companies. 

The second category encompasses non-reporting foreign private issuers that satisfy either of two alternative qualifications: the FPI has had its equity securities trading on a designated offshore securities market as defined in Rule 902(b) for at least 12 months, or the FPI has a worldwide market value of its outstanding common equity held by non-affiliates of $700 million or more. 

The third category encompasses asset-backed issuers and, specifically for purposes of Rule 168, the depositors, sponsors, and servicers of asset-backed securities and their affiliated depositors, even where such other persons are not themselves the issuer — a specific extension reflecting the unique structure of asset-backed securities transactions, in which the entities most knowledgeable about the underlying assets are often not the issuer but are essential communicators about the asset performance information relevant to investors.

Rule 168(b) defines factual business information for purposes of the safe harbour. 

The definition is deliberately open-ended, encompassing some or all of the following information released under the conditions of Rule 168(d): factual information about the issuer, its business or financial developments, or other aspects of its business; and advertisements of, or other information about, the issuer's products or services. 

The non-exhaustive character of the definition — some or all of the following — reflects the Commission's intent to provide a principled category that captures the complete range of genuinely factual business communications without prescribing an exhaustive list that could leave legitimate ordinary course communications outside the safe harbour through technical omission. 

The factual business information category specifically encompasses information contained in Exchange Act reports and other filings with the Commission, since that information has already been made available to investors through the formal disclosure infrastructure and presents no incremental gun-jumping concern when repeated or referenced in other communications.

Rule 168(c) defines forward-looking information for purposes of the safe harbour. Forward-looking information encompasses: projections of the issuer's revenues, income or loss, earnings or loss per share, capital expenditures, dividends, capital structure, or other financial items; statements about the issuer management's plans and objectives for future operations, including plans or objectives relating to the issuer's products or services; statements about the issuer's future economic performance, including statements of the type contemplated by the management's discussion and analysis disclosure required in annual and quarterly reports; and statements of the assumptions underlying or relating to any of these categories of forward-looking statement. 

The safe harbour's extension to forward-looking information is one of Rule 168's most commercially significant features — prior to the 2005 reform, the uncertain treatment of forward-looking communications during offering periods had created substantial practical uncertainty for companies managing earnings guidance programmes and analyst day presentations concurrently with capital markets activity. 

Rule 168 confirmed that regularly released forward-looking information — earnings guidance, management commentary on business outlook, and similar forward-looking communications released consistently with the issuer's prior practice — retains its safe harbour status regardless of offering process.

Rule 168(d) establishes the three conditions that must be satisfied for both factual business information and forward-looking information to receive safe harbour treatment. First, the issuer — or in the case of an asset-backed issuer, the issuer and the other eligible persons taken together — has previously released or disseminated information of the type described in this section in the ordinary course of its business. 

This prior release condition ensures that Rule 168 cannot be used to introduce new categories of communications precisely when an offering is being planned — a company that has not previously released earnings guidance cannot begin releasing earnings guidance for the first time in connection with or around the time of a registered offering and claim Rule 168 protection for that guidance. Importantly, the Commission confirmed in the adopting release that a single prior release can establish the necessary track record, without imposing any minimum number of prior releases or minimum duration of the release history.

Second, the timing, manner, and form in which the information is released or disseminated is consistent in material respects with similar past releases or disseminations. 

This consistency condition is the safe harbour's mechanism for distinguishing genuinely ordinary course communications from communications that have been modified in timing, format, or substance in connection with the offering. A company that releases quarterly earnings at 4:00 p.m. 

Eastern Time on the day of the release has a well-established practice consistent with Rule 168's conditions; a company that moves its earnings release to the morning of a road show or accompanies it with a lengthy investor presentation not previously part of its practice may not satisfy this consistency requirement for the new elements of the communication even if the core earnings figures themselves are consistently released. 

The consistency condition focuses on the communication as a whole — timing, manner, and form — not merely on the specific informational content, ensuring that Rule 168 cannot be exploited by embedding ordinary course information in extraordinary formats.

Third, the issuer is not an investment company registered under the Investment Company Act of 1940, other than a registered closed-end investment company. The June 2020 amendment specifically carved closed-end funds and BDCs out of the investment company exclusion, reflecting the Commission's determination that these vehicles — which operate like operating companies in significant respects and regularly communicate factual business and forward-looking information to investors — should have access to Rule 168's safe harbour on the same basis as operating companies.

Rule 168's preliminary notes establish three important interpretive principles. The rule is non-exclusive — attempted compliance with Rule 168 does not preclude reliance on any other applicable exemption or exclusion from the prospectus definition or Section 5's requirements, meaning that a communication that satisfies Rule 168's conditions benefits from the safe harbour while also retaining the availability of any other exemption that independently applies. 

Reliance on Rule 168 for one communication is not affected by another communication containing the same information that does not satisfy the rule's conditions — a press release that satisfies Rule 168 remains protected even if a subsequent oral communication repeating the same information in a manner that does not satisfy the conditions is not protected.

Scope of Application

Rule 168 applies across the complete offering timeline — from before any registration statement has been proposed through the completion of the offering — providing a consistently applicable safe harbour that does not vary based on the specific phase of the offering process. 

This temporal universality is what distinguishes Rule 168 from many of the other offering communications provisions in the Securities Act's framework, most of which are specific to particular phases — pre-filing, post-filing waiting period, or post-effective period — and provide protections calibrated to the specific gun-jumping concerns associated with each phase.

Rule 168's non-exclusive character means that an issuer whose communication satisfies both Rule 168 and another communications provision — such as Rule 163A's more-than-30-days-before-filing safe harbour or Rule 163's WKSI pre-filing exemption — may rely on whichever provision or combination of provisions is most appropriate for its circumstances, without the invocation of one provision displacing the availability of the others.

Relationship to Related Rules and Regulations

Rule 168's companion provision Rule 169 provides a parallel but more limited safe harbour for non-reporting issuers — issuers that are not required to file Exchange Act reports — covering only factual business information, not forward-looking information, and limited to communications intended for persons other than in their capacity as investors or potential investors. 

The distinction between Rule 168's broader scope for reporting issuers and Rule 169's narrower scope for non-reporting issuers reflects the Commission's calibration of the safe harbour to the issuer's existing disclosure infrastructure and investor communications history — reporting issuers have established reporting practices and track records that provide context for assessing the consistency of their ordinary course communications, while non-reporting issuers present greater uncertainty about whether a communication reflects genuine ordinary course practice or offering-specific market conditioning.

Rule 168's relationship with Rule 163 for WKSIs reflects the layered architecture of the 2005 reform's communications framework. 

A WKSI that communicates factual business and forward-looking information that satisfies Rule 168's conditions can rely on Rule 168 for that communication regardless of whether it is also a WKSI communication under Rule 163, with the Rule 168 protection available without the legend and post-filing filing conditions that Rule 163 imposes on written WKSI communications. 

Where the WKSI communication goes beyond Rule 168's factual business and forward-looking information categories — for example, by discussing the specific terms of a contemplated offering — Rule 163 rather than Rule 168 provides the applicable safe harbour, subject to its conditions.

Rule 168's exemption from the prospectus definition of Section 2(a)(10) connects directly to the antifraud provisions of Section 17(a) and Rule 10b-5, which apply independently of the Securities Act's registration and prospectus requirements. 

A communication that satisfies Rule 168's safe harbour and is therefore not a prospectus for gun-jumping purposes nonetheless remains fully subject to the general antifraud prohibition — an issuer that releases materially false or misleading factual business information or forward-looking information has not committed a Securities Act prospectus violation but may have committed a Rule 10b-5 fraud violation, with the distinction between these liability frameworks carrying significant consequence for the available remedies and the elements required to establish a claim.

Amendment History and Regulatory Evolution

Rule 168's operative framework has been stable since its 2005 adoption, with the June 2020 amendment constituting the most substantive change to the rule's scope by extending the safe harbour to registered closed-end funds and BDCs. 

That extension reflected the Commission's broader effort in the 2020 Exempt Offering Framework rulemaking to harmonise the communications treatment of investment company issuers with operating companies, recognising that the categorical exclusion of registered investment companies from Rule 168 had created an unnecessary asymmetry between otherwise comparable issuer types in their ability to communicate ordinary course business information during offering periods.

The regulatory landscape surrounding Rule 168 has continued to evolve through the Commission's interpretive guidance addressing specific factual questions about the rule's consistency condition — particularly questions about what modifications to timing, format, or content of a regularly released communication are material enough to take the communication outside the ordinary course character that Rule 168 requires, and what changes in the distribution method or audience scope of a communication affect its availability for safe harbour protection.

Enforcement Context and SEC Action Patterns

Rule 168 enforcement typically arises in the context of communications that were characterised by the issuer as ordinary course but that the Division of Corporation Finance identified as having been materially modified in timing, content, or format in a manner inconsistent with the issuer's prior practice — the paradigm of a communication that nominally invokes Rule 168's safe harbour while serving the offering-conditioning function that the rule's consistency conditions are specifically designed to prevent. 

These determinations are made through the Division's review of offering registration statements — particularly the portions of Form S-1 and Form S-3 cover pages that require identification of communications made in reliance on Rules 168 and 169 — and through the staff's monitoring of market communications during offering periods.

The Commission has emphasised through C&DI guidance that the consistency condition's focus on timing, manner, and form — rather than exclusively on content — means that an otherwise ordinary course communication may lose its Rule 168 protection if its format or distribution is altered in connection with an offering, even if its informational content is identical to prior releases. 

An earnings press release released in the same format and at the same time of day as prior releases satisfies the consistency condition; the same earnings press release reformatted as a glossy investor presentation or expanded with a section discussing the contemplated offering may not.

Examination Relevance and Key Takeaways

Rule 168 is examined at the Series 65 level as the safe harbour enabling reporting issuers to continue their ordinary course investor communications programmes — factual business information and forward-looking information — without interruption during registered offerings. The three conditions — prior release of the same type of information in the ordinary course, consistency in timing, manner, and form with prior releases, and issuer eligibility — are the primary examination content. 

The distinction between Rule 168's scope for reporting issuers — encompassing both factual business information and forward-looking information — and Rule 169's narrower scope for non-reporting issuers — limited to factual business information and communications not directed at investors — is a consistently examined contrast between the two companion provisions.

The rule's non-exclusive character — confirmed by the preliminary notes — and its temporal universality across the complete offering lifecycle are important examination concepts for understanding how Rule 168 fits within the broader architecture of the 2005 Securities Offering Reform's communications framework.

The key points to retain are these. Rule 168 provides a non-exclusive safe harbour under which regular releases of factual business information and forward-looking information by reporting issuers, eligible non-reporting foreign private issuers, and asset-backed issuer participants are deemed not to constitute prospectuses or pre-filing offers, regardless of whether a registration statement is proposed, pending, or effective. 

Factual business information encompasses factual information about the issuer, its business and financial developments, and product and service communications. Forward-looking information encompasses earnings projections, management plans and objectives, future performance statements, and underlying assumptions. 

Three conditions must be satisfied: prior release of the same type of information in the ordinary course of business; timing, manner, and form consistent in material respects with similar past releases; and the issuer must not be a registered investment company other than a registered closed-end fund. 

The safe harbour is non-exclusive and does not preclude reliance on other exemptions. The rule was adopted August 3, 2005, extended to registered closed-end funds and BDCs effective June 1, 2020, and no further amendments have been adopted through June 2026.