Question: Why Is Red Herring Prospectus Called So?

What is a red herring in law?

Definition from Nolo’s Plain-English Law Dictionary A legal or factual issue that is irrelevant and is used to divert attention away from the main issues of a case.

(The term is derived from the practice of training hunting dogs by dragging cured herrings across the scent trail of a fox.).

Why is it called a red herring prospectus?

A red herring prospectus may refer to the first prospectus filed with the SEC as well as a variety of subsequent drafts created prior to obtaining approval for public release. … The term “red herring” is derived from the bold disclaimer in red on the cover page of the preliminary prospectus.

What is the difference between red herring prospectus and prospectus?

Red Herring Prospectus, RHP, is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue. … On the other hand, an issuer can state the issue size and the number of shares are determined later.

What is meant by Drhp?

A draft red herring prospectus (DRHP), or offer document, is the preliminary registration document prepared by merchant bankers for prospective IPO-making companies in the case of book building issues.