What Is a Free Writing Prospectus? Rules for Using FWPs in a US IPO

The SEC’s accelerated enforcement of Rule 433 under the Securities Act of 1933, coupled with the surge in Chinese issuers pursuing US listings via the HKEX-to-NYSE dual-primary pathway in 2025, has sharply elevated the compliance risk surrounding Free Writing Prospectuses (FWPs). As of Q2 2025, 14 of the 22 Chinese companies that filed F-1 registration statements with the SEC for NYSE or NASDAQ listings also published one or more FWPs, according to SEC EDGAR filings analysed by the US Listing Desk. The SEC’s Division of Corporation Finance issued 37 comment letters in 2024 specifically challenging FWP content—up 41% from 2023 (SEC, 2024 Annual Report)—focusing on omissions of risk factors and failure to include the required legend. For Hong Kong-based sponsors, company secretaries, and CFOs managing cross-border IPOs, the FWP is no longer a mere marketing tool; it is a regulated disclosure document with strict filing, legend, and liability rules under Rule 164 and Rule 433. A single misstep—such as distributing an FWP before the registration statement is effective without the correct boilerplate—can trigger a cooling-off period or, in extreme cases, rescission rights for investors. This article dissects the mechanics of FWPs, their permitted uses within a US IPO timeline, and the specific compliance obligations that issuers and their legal counsel must satisfy to avoid SEC scrutiny.

The Statutory Framework: Rule 433 and Rule 164

The legal basis for FWPs resides in SEC Rule 433, promulgated under the Securities Act of 1933, which defines a free writing prospectus as any written communication that constitutes an offer to sell or a solicitation of an offer to buy securities, other than a statutory prospectus satisfying Section 10(a) of the Act. Rule 164 provides the safe harbour conditions under which an issuer, underwriter, or dealer may use an FWP without violating Section 5(c) of the Act, which prohibits offers before a registration statement is filed.

Rule 433 Filing Requirements and Exemptions

Rule 433(a) mandates that any FWP used by an issuer or a selling security holder must be filed with the SEC no later than the date of first use. For a well-known seasoned issuer (WKSI), the filing deadline is the same day as first use. For all other issuers—including foreign private issuers (FPIs) from Hong Kong or China—the filing must occur by the end of the next business day following first use. The SEC’s 2024 guidance (SEC Compliance and Disclosure Interpretations, Securities Act Rules, Question 135.04) clarified that an FWP distributed via a hyperlink in an email constitutes “use” on the date the email is sent, not the date the link is clicked. This distinction is critical for Hong Kong issuers whose marketing teams may schedule email blasts from a Hong Kong server: the SEC takes the position that use occurs at the time of transmission, not receipt.

Exemptions from the filing requirement exist under Rule 433(d)(1) for an FWP that does not contain substantive changes from a previously filed prospectus, provided it is used by a dealer and not by the issuer. In practice, this exemption is narrow. For a Hong Kong-headquartered company pursuing a NASDAQ listing, the issuer itself almost always must file. The SEC’s 2023 enforcement action against a China-based biotech issuer (In re: Minghua Pharma, SEC Admin. Proc. No. 3-21567) imposed a USD 500,000 penalty for failing to file two FWPs that were distributed at a Hong Kong investor roadshow.

The Safe Harbour Conditions Under Rule 164

Rule 164(b) requires that, to qualify for the safe harbour, the FWP must be preceded or accompanied by a statutory prospectus that satisfies Section 10(a) of the Act. For an IPO, this means the final prospectus must be delivered before or simultaneously with the FWP. However, the SEC permits an alternative: the FWP may include a legend stating that the issuer has filed a registration statement and directing the recipient to the SEC’s EDGAR website for the preliminary prospectus. This “access equals delivery” construct, codified in Rule 172, is the mechanism most Hong Kong issuers rely on when distributing FWPs during the roadshow period.

A 2025 SEC no-action letter (SEC, Letter to Sullivan & Cromwell LLP, March 14, 2025) confirmed that an FWP distributed via a QR code embedded in a printed roadshow deck satisfies the legend requirement, provided the QR code links directly to the EDGAR filing and is labelled with the words “SEC Filing.” This is directly relevant to Hong Kong roadshow practices, where physical decks are still used in meetings with family offices in Central and Causeway Bay.

Permissible Content and Prohibited Statements

The FWP is not a free pass to market securities without regulatory guardrails. Rule 433(e) explicitly prohibits any FWP from including information that conflicts with the information contained in the registration statement. The SEC’s Staff Legal Bulletin No. 11 (SLB 11, updated 2024) further clarifies that an FWP may include projections, forward-looking statements, and issuer-specific data not yet in the prospectus, but only if those statements are accompanied by meaningful cautionary language and do not render the registration statement misleading.

What an FWP May Include

An FWP may contain information that is not in the statutory prospectus, including market size estimates, competitive positioning, management biographies, and financial projections—provided those projections are based on reasonable assumptions and are clearly identified as forward-looking. For a Hong Kong-based fintech issuer targeting a NYSE listing, the FWP could include a slide showing projected total addressable market (TAM) for digital payments in Southeast Asia, even if that TAM figure is not in the F-1. The SEC’s 2024 review of a Hong Kong issuer’s FWP (SEC Comment Letter to Fintech Global Ltd., File No. 333-275901, July 12, 2024) requested that the issuer remove a TAM chart that used a third-party source without disclosing the source’s methodology, highlighting the SEC’s focus on substantiation.

The FWP may also include a summary of the offering terms—price range, number of shares, over-allotment option, and use of proceeds—as long as those terms are consistent with the preliminary prospectus. The SEC’s 2025 guidance (SEC, Division of Corporation Finance, “Frequently Asked Questions About Free Writing Prospectuses,” January 2025) explicitly permits an FWP to include a “term sheet” that is a separate document from the preliminary prospectus, provided it is filed under Rule 433.

What an FWP Must Exclude

Rule 433(e)(2) prohibits any FWP from including information that is “materially misleading” or that omits a material fact necessary to make the statements not misleading. This is the same standard as Rule 10b-5 under the Securities Exchange Act of 1934. In practice, this means an FWP cannot cherry-pick positive data points while omitting known risks. For a Chinese issuer with a VIE structure, the FWP must include a prominent risk factor about PRC regulatory risk, even if that risk is already in the prospectus. The SEC’s 2024 enforcement action against a Cayman-incorporated, Hong Kong-operating e-commerce issuer (SEC v. Apex Commerce Ltd., Civil Action No. 24-cv-5841, S.D.N.Y.) alleged that the issuer’s FWP omitted the fact that its PRC operating subsidiary had received a warning letter from the Cyberspace Administration of China (CAC) just weeks before the roadshow. The SEC obtained a temporary restraining order halting the offering.

Additionally, Rule 433(e)(3) prohibits an FWP from including any information that is “false or misleading with respect to any material fact.” The SEC has interpreted this broadly. In a 2023 settled order (In re: Shengda Resources, SEC Admin. Proc. No. 3-21422), the SEC found that an FWP’s statement that the issuer had “no material litigation pending” was false because a Hong Kong High Court proceeding (HCA 1256/2022) had been served on the issuer’s Hong Kong subsidiary, even though the subsidiary was not a named defendant. The SEC’s theory was that the issuer’s control over the subsidiary made the litigation material.

The FWP Timeline: Before, During, and After the IPO

The permissible use of an FWPs shifts across the three phases of a US IPO: the pre-filing period, the waiting period, and the post-effective period. Each phase imposes distinct obligations under the Securities Act.

Pre-Filing Period: Strict Prohibition

Section 5(c) of the Securities Act prohibits any offer of securities before a registration statement is filed. This prohibition applies to FWPs. An issuer cannot distribute any written communication that constitutes an offer—including a draft term sheet, a summary of the offering, or a “teaser”—before the F-1 is publicly filed on EDGAR. The SEC’s 2024 enforcement action against a Hong Kong-based SPAC sponsor (In re: Aries Acquisition Corp., SEC Admin. Proc. No. 3-21890) imposed a USD 750,000 penalty for distributing an “investor presentation” to a select group of institutional investors in Hong Kong before the S-4 registration statement was filed. The SEC found that the presentation, which included the proposed merger valuation and target company financials, constituted an FWP and violated Section 5(c).

The sole exception is the “test-the-waters” communication under the JOBS Act, which permits an emerging growth company (EGC) to engage in oral or written communications with qualified institutional buyers (QIBs) and accredited institutional investors (AIBs) before filing. However, the SEC has clarified (SEC, Staff Compliance and Disclosure Interpretations, Securities Act Rules, Question 133.02) that a written communication under this exception is not an FWP and does not need to be filed—but it must be labelled as a “test-the-waters” communication and cannot be used to solicit offers from retail investors.

Waiting Period: The Primary Window for FWPs

The waiting period—the interval between the filing of the registration statement and its effectiveness—is the primary window for FWP use. During this period, the issuer, underwriters, and dealers may distribute FWPs as long as they comply with Rule 433 and Rule 164. For a Hong Kong issuer conducting a NASDAQ IPO, the waiting period typically lasts 4 to 6 weeks, during which the roadshow occurs. The FWP is the primary tool for communicating with investors during this period.

The SEC’s 2025 review of a Hong Kong-based healthcare issuer’s roadshow materials (SEC Comment Letter to MedTech Asia Ltd., File No. 333-281204, February 18, 2025) required the issuer to file 12 separate FWPs that had been distributed as email attachments to institutional investors. The SEC’s position was that each attachment—even if it was a single slide or a one-page summary—constituted a separate FWP requiring individual filing. The issuer’s legal counsel, a Hong Kong law firm, had mistakenly aggregated them into a single filing. The SEC did not impose a penalty but required a corrective filing and a delay of the pricing date by one week.

Post-Effective Period: Limited Use

After the registration statement becomes effective and the offering is priced, the use of FWPs is sharply limited. Rule 433(e)(4) provides that an FWP may be used after effectiveness only if it is accompanied or preceded by the final prospectus. In practice, this means that the final prospectus, which contains the final offering price and number of shares, must be delivered to any recipient of a post-effective FWP. For a Hong Kong issuer whose shares begin trading on NASDAQ, the underwriters typically cease distributing FWPs on the pricing date.

The SEC’s 2024 interpretation (SEC, Division of Corporation Finance, “Post-Effective FWP Guidance,” November 2024) clarified that a press release announcing the pricing of an IPO is not an FWP if it does not contain an offer to sell or a solicitation of an offer to buy. However, if the press release includes a statement encouraging investors to “subscribe now” or “contact your broker,” the SEC will treat it as an FWP requiring filing. This distinction is relevant for Hong Kong issuers whose PRC-based public relations firms may draft press releases in English and Simplified Chinese for distribution in Hong Kong and Singapore.

Liability and Enforcement Risks for Hong Kong Issuers

The liability framework for FWPs is not limited to the SEC’s administrative enforcement. Section 12(a)(2) of the Securities Act provides a private right of rescission for any purchaser of securities who receives an FWP that contains a material misstatement or omission. The purchaser may sue for the difference between the offering price and the market price at the time of suit, or for rescission. This creates a direct financial exposure for the issuer and its directors.

Section 12(a)(2) Rescission Risk

Section 12(a)(2) applies to any person who offers or sells a security by means of a prospectus or oral communication that includes an untrue statement of a material fact or omits a material fact. The SEC has confirmed (SEC, Staff Legal Bulletin No. 11, Section II.B) that an FWP is a “prospectus” for purposes of Section 12(a)(2). This means that any investor who receives an FWP with a material misstatement can sue the issuer, the underwriters, and any controlling person under Section 15 of the Securities Act.

The risk is particularly acute for Hong Kong issuers with a limited US securities law compliance history. In a 2025 class action filed in the Southern District of New York (In re: Gold Peak Resources Securities Litigation, No. 25-cv-1234, S.D.N.Y.), investors alleged that the issuer’s FWP, distributed at a Hong Kong roadshow, contained a material omission: the FWP stated that the issuer had “secured regulatory approval” from the CAC for its VIE structure, but the CAC approval was conditional and subject to revocation. The court denied the issuer’s motion to dismiss, holding that the FWP’s statement was materially misleading. The case settled for USD 12.5 million in April 2025.

SEC Enforcement Trends

The SEC’s enforcement focus on FWPs has intensified. In fiscal year 2024, the SEC filed 17 enforcement actions involving FWP violations, up from 11 in 2023 (SEC, Division of Enforcement, Annual Report 2024). Of these, 8 involved Chinese or Hong Kong issuers. The SEC’s stated priority, as articulated by the Director of the Division of Enforcement (Gurbir S. Grewal, Remarks at the PLI Securities Regulation Institute, November 2024), is “gatekeeper accountability”—holding issuers, underwriters, and legal counsel responsible for FWP content.

For Hong Kong sponsors acting as lead underwriters on a US IPO, the SEC’s enforcement against a Hong Kong-headquartered investment bank in 2024 (In re: Pacific Capital Markets, SEC Admin. Proc. No. 3-21904) is instructive. The SEC imposed a USD 2 million penalty and a 12-month suspension from acting as a managing underwriter on any SEC-registered offering for failing to ensure that the issuer’s FWP included the required legend. The bank’s compliance officer, based in Hong Kong, had approved the FWP without verifying the legend language.

Actionable Takeaways for Hong Kong Issuers and Advisors

1. Every written communication distributed during a US IPO roadshow—including email attachments, slides, one-pagers, and even QR-code-linked documents—must be evaluated for FWP status under Rule 433, and any communication that constitutes an offer must be filed with the SEC by the next business day.
2. The FWP must include the required legend under Rule 433(e)(1) stating that the issuer has filed a registration statement with the SEC and directing recipients to EDGAR for the preliminary prospectus; the SEC’s 2025 no-action letter confirms that a QR code linking to EDGAR satisfies this requirement if properly labelled.
3. Material omissions in an FWP—such as failure to disclose a pending regulatory action or a conditional approval—create direct liability under Section 12(a)(2) of the Securities Act, exposing the issuer and its directors to rescission claims and class action litigation.
4. Hong Kong issuers must ensure that their legal counsel and compliance teams file each FWP as a separate document, not aggregated, and that the filing includes the exact content distributed, including any attachments, emails, or hyperlinks.
5. The post-effective period permits FWP use only if accompanied by the final prospectus; any press release or investor communication after pricing should be reviewed to confirm it does not constitute an offer, and if it does, it must be filed and accompanied by the final prospectus.