Gun Jumping
1. The illegal practice of soliciting orders to buy a new issue before registration of the initial public offering (IPO) has been approved by the Securities and Exchange Commission (SEC).
2. Trading securities on the basis of information that has not yet been disclosed to the public.
Investopedia Commentary
The theory behind gun jumping is that investors should make decisions based on the full disclosure in the prospectus, not on the information disseminated by the company that has not been approved by the SEC. If a company is found guilty of "jumping the gun", the IPO will be delayed.
Related Links
Don't Forget To Read The Prospectus!
IPO Basics Tutorial
See also: IPO, Prospectus, Regulation FD (Reg FD), SEC
gun jumping
The trading in a security before inside information has been released to the public.
Solicitation of orders for a new security underwriting before the SEC has approved the registration statement.