Contingency Offering Mechanics

What this video covers

• Why the prohibited-representations rule triggers the instant an all-or-none (AON), part-or-none, or mini-max label is used, and why neither issuers nor underwriters can opt out by contract
• The two unconditional requirements under the prohibited-representations rule: prompt refund if the represented amount is not sold, and receipt by the seller by a specified date
• How a genuine firm-commitment underwriting is completely outside the prohibited-representations rule because the underwriter bears all placement risk
• The broader trigger of the investor-payment rule: any distribution other than a firm-commitment underwriting, regardless of contingency label
• Why a plain best efforts offering with no contingency representation uses the simpler "promptly transmit" path, while a contingency offering forces the segregated account or escrow path
• The exact escrow requirements for contingency offerings, including why the escrow bank must be unaffiliated with both the broker-dealer and the issuer
• Why "promptly" in SEC rule text means exactly that, and why any exam answer inventing a fixed deadline like "noon the next business day" is a trap