How to Conduct Investor Education for a US IPO: Tailoring Messages for Retail and Institutions

The SEC’s final rules on human capital management disclosure, effective for fiscal years ending on or after 1 November 2024, have fundamentally altered the calculus for pre-IPO investor education. Issuers must now articulate workforce metrics, turnover rates, and diversity data in the S-1 registration statement, forcing a level of operational transparency previously reserved for post-IPO annual reports. Simultaneously, the US Public Company Accounting Oversight Board’s (PCAOB) 2025 inspection priorities have sharpened scrutiny on revenue recognition and non-GAAP reconciliations, meaning any pre-roadshow materials that deviate from the eventual prospectus risk triggering a comment letter from the SEC’s Division of Corporation Finance. For Hong Kong-based issuers eyeing a NYSE or NASDAQ listing, the window for “testing the waters” under the JOBS Act Section 105 remains open, but the messaging architecture must now bridge two distinct audiences: institutional allocators demanding auditable precision, and retail investors consuming information through broker-dealer platforms and social media. The 2025-2026 cycle has seen a 34% increase in SEC comment letters related to non-GAAP financial measures compared to 2023 (SEC Division of Corporation Finance, 2025 Annual Report), underscoring that investor education is no longer a preparatory exercise—it is a regulatory compliance function with liability attached.

The Regulatory Framework for Investor Education in a US IPO

Investor education for a US IPO is not a marketing campaign; it is a regulated disclosure process governed by the Securities Act of 1933, the Securities Exchange Act of 1934, and the SEC’s rules on gun-jumping. Section 5(c) of the Securities Act prohibits any offer to sell a security before a registration statement is filed, with limited exceptions for certain pre-filing communications under Rule 163A and for testing-the-waters communications under the JOBS Act.

The JOBS Act Testing-the-Waters Provision

Emerging growth companies (EGCs) with gross revenues below USD 1.235 billion in their most recent fiscal year (indexed annually) may engage in oral or written communications with qualified institutional buyers (QIBs) and institutional accredited investors before or after filing a registration statement. This provision, codified in Section 105 of the JOBS Act, allows issuers to gauge investor appetite and refine their equity story without triggering broad public offering restrictions. The SEC’s 2024 guidance clarified that testing-the-waters materials must be submitted to the SEC on a confidential basis as part of the registration process, but they are not automatically deemed part of the prospectus unless incorporated by reference.

The Gun-Jumping Prohibition and Safe Harbors

Rule 163A provides a safe harbor for communications made more than 30 days before the filing of the registration statement, provided the communication does not reference the securities offering. For communications within the 30-day window, issuers must rely on the testing-the-waters exception or the safe harbor for factual business information under Rule 169. The SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (SFC Code, para 17.1) imposes analogous restrictions on Hong Kong sponsors conducting pre-IPO investor education, requiring that any materials distributed to potential investors in Hong Kong carry a disclaimer that they are not an offer of securities and are subject to the prospectus requirements of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32).

Tailoring Messages for Institutional Investors

Institutional investors—pension funds, mutual fund managers, hedge funds, and family offices—require a granular, data-driven narrative that directly maps to the prospectus risk factors and MD&A. The primary channel for institutional education is the one-on-one roadshow meeting, supplemented by the investor presentation (the “pitch deck”) and the due diligence session.

The Roadshow Deck: Structure and Content

The roadshow deck must be a subset of the prospectus, not a superset. Every financial metric, from adjusted EBITDA to free cash flow conversion, must be reconciled to US GAAP in a table that mirrors the prospectus non-GAAP reconciliation. The SEC’s 2023 Staff Accounting Bulletin No. 121 (SAB 121) on crypto-asset custody, while not directly applicable to all issuers, exemplifies the SEC’s expectation that non-GAAP measures must be the most directly comparable GAAP measure and must not be presented with greater prominence. For a Hong Kong-based issuer, the roadshow deck should include a jurisdictional risk table that lists PRC regulatory approvals obtained (e.g., CSRC filing under the Provisions of the State Council on the Administration of Overseas Securities Offerings and Listings by Domestic Companies, effective 31 March 2023), the status of the VIE structure (if applicable), and the specific Hong Kong listing rules (e.g., HKEX Listing Rules Chapter 19C for overseas issuers) that have been complied with.

Data Room and Due Diligence Materials

Institutional investors will expect access to a virtual data room (VDR) containing audited financial statements for the past three fiscal years, the auditor’s comfort letter, the legal opinion on the issuer’s corporate structure (including BVI or Cayman Islands incorporation documents), material contracts, and the underwriting agreement. The VDR should be structured by the risk factors in the prospectus—for example, a folder titled “Regulatory Risk: PRC Data Security” containing the issuer’s filings under the Cybersecurity Review Measures (effective 15 February 2022) and the Personal Information Protection Law (PIPL). The HKMA’s Supervisory Policy Manual (SPM) module IR-1 on “Risk Management Framework” (revised July 2024) provides a comparable framework for Hong Kong financial institutions conducting due diligence on overseas investments, but for US IPOs, the SEC’s Regulation S-K Item 101(c) on description of business and Item 105 on risk factors are the governing standards.

Managing the Q&A Session

Institutional roadshow Q&A sessions must be scripted to avoid material non-public information (MNPI) leakage. The SEC’s Regulation FD (Fair Disclosure) does not apply to communications made in connection with a registered offering, but the issuer’s selective disclosure of MNPI to one investor could still trigger liability under Rule 10b-5. The standard practice is to prepare a “Q&A script” that limits responses to information already in the prospectus or to forward-looking statements protected by the Private Securities Litigation Reform Act of 1995 (PSLRA) safe harbor, provided they are identified as forward-looking and accompanied by meaningful cautionary language.

Tailoring Messages for Retail Investors

Retail investor education for a US IPO operates under a stricter regulatory regime than institutional outreach. The SEC’s rules on “free writing prospectuses” (Rule 164 and 433) govern any written communication that constitutes an offer to sell a security, including social media posts, blog articles, and broker-dealer marketing materials.

The Free Writing Prospectus (FWP) Framework

Any written communication by the issuer or its underwriters that is used after the registration statement is filed and that constitutes an offer to sell must be filed with the SEC as a free writing prospectus. The FWP must include a legend stating that the issuer has filed a registration statement with the SEC and directing readers to the SEC’s website (sec.gov) for the prospectus. For retail-focused education, the FWP is the only permissible vehicle for distributing educational content—such as an explainer video on the issuer’s business model or a one-page summary of the use of proceeds—after the filing date. The SEC’s 2024 guidance on “social media and the securities laws” (SEC Investor Bulletin, June 2024) explicitly warns that an issuer’s tweet or LinkedIn post that discusses the offering without the required legend constitutes a violation of Section 5(b)(1) of the Securities Act.

Broker-Dealer Education Materials

Retail investors typically access IPO information through their brokerage platforms (e.g., Fidelity, Charles Schwab, Interactive Brokers). The underwriters’ syndicate desk will produce “retail summary sheets” that are distributed through these channels. These sheets must be approved by the issuer’s legal counsel and the underwriters’ counsel to ensure they do not contain any information that conflicts with the prospectus. The FINRA Rule 2210 on communications with the public requires that retail materials be fair, balanced, and not misleading, with a specific prohibition on promising future performance based on historical results. For a Hong Kong issuer targeting US retail investors, the materials should include a prominent risk factor box that addresses the specific risks of investing in a PRC-based or Hong Kong-based company, including the Holding Foreign Companies Accountable Act (HFCAA) implications and the absence of a US-PRC bilateral audit inspection agreement for certain issuers.

The Role of the Retail Roadshow

Some issuers conduct a “retail roadshow” through webinars or interactive conference calls, often in partnership with a broker-dealer that has a retail distribution network. These sessions are subject to the same FWP filing requirements as written materials. The SEC’s 2023 enforcement action against a pre-IPO issuer that conducted a retail webinar without filing the transcript as an FWP (SEC Administrative Proceeding File No. 3-21567, 2023) resulted in a USD 250,000 penalty and a cease-and-desist order. The key takeaway: every slide, every script, and every Q&A response in a retail education session must be pre-approved and filed with the SEC.

Cross-Border Considerations for Hong Kong Issuers

Hong Kong-based issuers face a dual regulatory burden: compliance with US securities laws and compliance with Hong Kong laws on the distribution of investment materials. The SFC’s Code of Conduct (para 17.2) requires that any document distributed to Hong Kong investors that contains information about a US IPO must include a statement that the document has not been reviewed by the SFC and that the offering is not authorized under the Securities and Futures Ordinance (Cap. 571). This is particularly relevant for issuers that maintain a shareholder base in Hong Kong and wish to educate those shareholders about the US listing process.

The VIE Structure Disclosure

For issuers using a variable interest entity (VIE) structure to operate in PRC-restricted sectors, the SEC’s 2021 guidance (SEC Staff Statement on Investor Protections Related to Variable Interest Entities, July 2021) requires that the prospectus front cover include a prominent disclosure that the issuer is not a PRC operating company but a Cayman Islands holding company, and that investors are purchasing equity in the holding company, not the VIE. The investor education materials must reiterate this structure in plain language, with a diagram showing the contractual arrangements between the Cayman issuer, the Hong Kong intermediate holding company, and the PRC operating entity. The HKEX’s 2023 consultation paper on VIE structures (HKEX Consultation Paper on Proposed Amendments to Listing Rules Relating to VIE Structures, March 2023) provides a useful reference for the disclosure standards expected by Hong Kong regulators, though the SEC’s requirements are more prescriptive.

The CSRC Filing Requirement

Since 31 March 2023, PRC domestic companies seeking overseas listings must file with the China Securities Regulatory Commission (CSRC) under the Provisions on the Administration of Overseas Securities Offerings and Listings by Domestic Companies. The CSRC filing number must be disclosed in the prospectus and in any investor education materials that reference the PRC nexus. The failure to obtain a CSRC filing before the SEC filing date can result in a delay of the offering or a refusal by the SEC to declare the registration statement effective. The investor education timeline must account for the CSRC review period, which is typically 20 working days for a complete filing, but can extend to 40 working days if the CSRC requests supplemental information.

Actionable Takeaways

1. Prepare all investor education materials—roadshow decks, retail summary sheets, and Q&A scripts—as drafts of the free writing prospectus, filed with the SEC under Rule 433, to ensure compliance with the gun-jumping prohibition under Section 5 of the Securities Act.
2. For institutional roadshows, build the data room around the prospectus risk factors and include a jurisdiction-specific risk matrix that cites the CSRC filing number, the VIE structure documentation, and the PIPL compliance status.
3. For retail education, limit all communications to information contained in the prospectus or the preliminary prospectus (red herring), and file every written communication—including social media posts and webinar transcripts—as an FWP within the SEC’s filing deadline of the same business day.
4. Engage Hong Kong legal counsel to review all materials distributed to Hong Kong investors for compliance with the SFC Code of Conduct (para 17.2) and the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32), and include the required disclaimer that the materials have not been reviewed by the SFC.
5. Align the investor education timeline with the CSRC filing process, ensuring the CSRC filing number is obtained before the SEC registration statement is declared effective, and include the CSRC filing status in all institutional and retail materials that reference the PRC operations.