Prospectus is a formal written document that accompanies a new offering of a corporate security, meant to provide information to potential buyers of that security. It contains detailed information on the company’s history, financial state, current business plans, the names of its directors and officers as well as any pending litigation it is involved in. The prospectus is usually an abridged version of the company’s registration statement filed with the Securities and Exchange Commission (SEC).
Prospectus is defined in section 2(a)(10) of the Securities Act of 1933 as “prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security”. The prospectus is a document of great legal significance and any fraud, misrepresentation and omission in a prospectus is actionable under §§ 11, 12(a)(2) of the Securities Act. See also: Steinberg v. PRT Group Inc., 88 F.Supp.2d 294.
[Last updated in March of 2022 by the Wex Definitions Team]