red herring

red herring   n.   A smoked herring having a reddish color. Something that draws attention away from the central issue. [From its use to distract hunting dogs from the trail.]

Red Herring

A preliminary registration statement that must be filed with the SEC describing a new issue of stock (IPO) and the prospects of the issuing company.

Investopedia Commentary

There is no price or issue size stated in the red herring, and it is sometimes updated several times before being called the final prospectus. It is known as a red herring because it contains a passage in red that states the company is not attempting to sell their shares before the registration is approved by the SEC.

Related Links

Don't Forget To Read The Prospectus!
IPO Basics Tutorial

See also: Gun Jumping, IPO, Issuer, Prospectus, SEC, Tombstone, Underwriting

red herring

A prospectus that is given to potential investors in a new security issue before the selling price has been set and before the issuer's registration statement has been approved for accuracy and completeness by the SEC. This document, which provides details of the issue and facts concerning the issuer, is so named because of a statement on it, printed in red, that the issue has not yet been approved by the SEC. Also called preliminary prospectus.

Main Entry: red her·ring
Pronunciation: "red-'her-i[ng]
Function: noun
Etymology: red herring something that distracts attention from the main issue, diversion
: a preliminary prospectus (as for the sale of securities) that is not yet approved by the appropriate body (as the Securities and Exchange Commission)

red herring

Something that draws attention away from the central issue, as in Talking about the new plant is a red herring to keep us from learning about downsizing plans. The herring in this expression is red and strong-smelling from being preserved by smoking. The idiom alludes to dragging a smoked herring across a trail to cover up the scent and throw off tracking dogs. [Late 1800s]