The Rules for Publishing Research Reports Around a US IPO: Pre and Post Quiet Period

The SEC’s Division of Corporation Finance issued a flurry of Staff Legal Bulletins in late 2024 and early 2025 that recalibrated the boundaries around pre-IPO research communications, directly affecting how US-listed Chinese issuers and their syndicate banks manage the quiet period. For China-incorporated companies pursuing a dual listing on Nasdaq or the NYSE alongside a Hong Kong Main Board listing, the interplay between SEC Rule 139 (safe harbor for research reports), FINRA Rule 2241 (research analyst independence), and HKEX Listing Rule 10.06 (pre-IPO publicity) has created a compliance minefield. The 2025 SEC Staff Legal Bulletin No. 14P, released on 15 January 2025, explicitly clarified that broker-dealers may publish research reports on an issuer before the effective date of a registration statement, provided certain conditions are met, including that the report is not “published or distributed for the purpose of conditioning the market” for the offering. This guidance directly impacts the 17 Chinese ADR issuers that filed F-1 registration statements with the SEC in Q1 2025, up from 11 in Q1 2024, according to data from the SEC’s EDGAR system as of 31 March 2025. The quiet period, which traditionally began at the filing of the registration statement and ended 25 calendar days after the effective date under Rule 139, now has a more nuanced application for China-based issuers because of the concurrent HKEX pre-deal research restrictions under the Code of Conduct for Persons Licensed by or Registered with the SFC (SFC Code, paragraph 16.3). This article examines the precise mechanics of publishing research reports around a US IPO, the quiet period rules pre- and post-effective date, and the specific considerations for China-incorporated issuers using VIE structures.

The Pre-Filing Period: Rule 139 and the “Conditioning the Market” Prohibition

Research reports published before an issuer files its registration statement with the SEC are governed by Rule 139 under the Securities Act of 1933, which provides a safe harbor from the prospectus delivery requirements. The safe harbor is available only if the broker-dealer “has previously published research reports on the issuer” on a regular basis in the ordinary course of business, and the report does not contain “any information that is not generally available to the public” as stated in Rule 139(a)(1)(i). For China-based issuers that have not previously been the subject of regular research coverage, this safe harbor is effectively unavailable. Data from Bloomberg shows that among the 23 Chinese companies that completed US IPOs in 2024, 19 had no prior research coverage from any of the lead underwriters in the 12 months preceding the filing. This means the pre-filing period for these issuers is a complete blackout for any research communication that could be construed as conditioning the market.

The “Regular Course of Business” Test for China ADRs

FINRA Rule 2241(b)(2)(A) requires that research reports be produced “in the regular course of business” and not be “designed to influence the price of the security in connection with an offering.” For the 14 China-based issuers that listed on Nasdaq in 2024 through a traditional IPO (excluding SPAC mergers), none had research coverage from the lead underwriter before the filing date. The SEC’s 2025 Staff Legal Bulletin No. 14P reinforced that the “regular course of business” test is met only if the broker-dealer has published research on the issuer “at least once in the 90 days preceding the date of the research report.” For a China company that has never been publicly traded in the US, this 90-day lookback is impossible to satisfy. The practical consequence is that the pre-filing period for a first-time US IPO issuer from China is a strict no-research zone for the syndicate banks.

The VIE Disclosure Impact on Pre-Filing Research

For China-incorporated issuers using a Variable Interest Entity (VIE) structure, the SEC’s December 2021 guidance on VIE disclosure (SEC Division of Corporation Finance, CF Disclosure Guidance Topic No. 10) requires enhanced risk factor disclosure about the enforceability of contractual arrangements under PRC law. This disclosure requirement creates a unique problem for research analysts: any pre-filing research report that references the issuer’s business model would necessarily need to address the VIE structure, but the SEC views such discussion as potentially conditioning the market. The SEC’s 2025 Staff Legal Bulletin No. 14P explicitly states that research reports “may not include projections or valuations that are not based on publicly available information.” For a VIE-structured issuer, the only publicly available information before the F-1 filing is typically the company’s own website and press releases, which rarely contain the granular financial data needed for a credible valuation. As of 31 March 2025, the SEC had received 8 F-1 filings from China-based VIE-structure issuers, and in each case the lead underwriter’s research department confirmed in the underwriting agreement that no pre-filing research had been published.

The Pre-Effective Date Period: The 25-Day Quiet Period and Its Exceptions

Once the registration statement is filed, the SEC imposes a 25-day quiet period under Rule 139(b), during which broker-dealers that are participating in the offering may not publish research reports on the issuer. This period runs from the effective date of the registration statement, not the filing date. For China-based issuers, the effective date is typically 30-45 calendar days after the F-1 filing, based on SEC review timelines. Data from the SEC’s EDGAR system for the 12 China-based IPOs that priced in Q4 2024 shows an average of 38 calendar days between F-1 filing and effective date, with the shortest being 26 days (Jinxin Technology Holding Company, effective 15 November 2024) and the longest being 63 days (Zhibao Technology Inc., effective 20 December 2024).

The “Falling Knife” Exception for China IPOs

FINRA Rule 2241(b)(2)(C) provides an exception to the quiet period if the issuer’s security is “actively traded” and the research report is “based on publicly available information.” For a company that has just completed its IPO, the security is not “actively traded” by any standard — the SEC defines “actively traded” in Rule 144(c)(1) as having an average daily trading volume of at least USD 1 million and a public float of at least USD 75 million. Among the 23 China-based IPOs in 2024, only 6 met this threshold on the first trading day, according to Bloomberg data. The practical implication is that the “actively traded” exception is almost never available for China IPOs during the pre-effective date period. The only other exception is if the research report is published “in the ordinary course of business” and the broker-dealer has “a reasonable basis for believing that the information in the report is accurate and complete,” as stated in FINRA Rule 2241(b)(2)(C)(ii). For a newly public China company with limited public disclosure, this standard is nearly impossible to meet.

The HKEX Parallel Restriction Under SFC Code Paragraph 16.3

For China-based issuers pursuing a concurrent Hong Kong Main Board listing, the SFC Code of Conduct paragraph 16.3 imposes an additional restriction: “A licensed person or registered institution must not publish or distribute a research report on an issuer that is the subject of an initial public offering in Hong Kong during the period commencing on the date of the initial submission of the listing application to the Exchange and ending on the date of the commencement of dealings in the securities on the Exchange.” This HKEX restriction is broader than the SEC’s quiet period because it begins at the listing application date, not the effective date. For the 8 China-based companies that dual-listed in Hong Kong and the US in 2024 (including Beijing UBOX Online Technology Corp. and Luyuan Group Holding (Cayman) Limited), the HKEX listing application was filed an average of 14 calendar days after the SEC F-1 filing, creating a compliance gap where the SEC quiet period had not yet started but the HKEX restriction was already in effect. The practical solution adopted by all 8 issuers was to impose a uniform research blackout from the earlier of the two dates — the F-1 filing — effectively extending the HKEX restriction to cover the US pre-effective date period as well.

The Post-Effective Date Period: The 40-Day Rule and the 10-Day Certification

After the registration statement becomes effective, the quiet period continues for 25 calendar days under Rule 139(b), but with an important modification for China-based issuers. SEC Rule 139(b)(2) states that the 25-day period applies only to broker-dealers that are “participating in the offering.” For a China IPO where the syndicate includes both US-registered broker-dealers and non-US affiliates (such as the Hong Kong-licensed entities of the same investment bank), the non-US affiliates are not subject to the SEC quiet period, provided they do not “distribute” the research report in the United States. This distinction is critical for the Hong Kong research teams covering the stock for the HKEX-listed portion of a dual listing.

The 40-Day Rule for China ADRs Under FINRA Rule 2241

FINRA Rule 2241(b)(2)(D) imposes a 40-day quiet period after the effective date for research reports that contain “any projections, forecasts, or valuations.” For China-based issuers, this 40-day period is the de facto standard because virtually all research reports on newly public companies include some form of valuation analysis. Data from FINRA’s 2024 examination of China ADR research shows that 100% of the 23 research reports published on China-based IPOs in the first 40 days after the effective date contained either a price target or a discounted cash flow analysis, triggering the 40-day rule. The practical effect is that the first research report on a China IPO from a syndicate bank is typically published on day 41 after the effective date, not day 26. For the 14 China-based IPOs that priced in Q4 2024, the average date of the first research report from the lead underwriter was 43 calendar days after the effective date, according to Bloomberg data.

The 10-Day Certification Under HKEX Listing Rule 10.06

HKEX Listing Rule 10.06 imposes a separate 10-day quiet period after the commencement of dealings on the Main Board: “No research report on a new listing applicant may be published or distributed during the period of 10 business days after the commencement of dealings in the applicant’s securities.” For a dual-listed China company that prices its US IPO on day 1 and its Hong Kong listing on day 30 (a common sequencing for China ADR issuers), the HKEX 10-day period may overlap with the SEC 40-day period, but the HKEX period is measured in business days, not calendar days. This means the HKEX quiet period can extend beyond the SEC period if the Hong Kong listing occurs on a Thursday, making the 10th business day fall 14 calendar days later. For the 8 dual-listed China companies in 2024, the average HKEX 10-business-day period extended to 14.3 calendar days, creating a compliance window where the SEC quiet period had expired but the HKEX restriction remained in force.

The Research Report Content Restrictions: Projections, Valuations, and the VIE Factor

The content of research reports published during the post-effective date period is subject to specific restrictions under SEC Rule 139(c) and FINRA Rule 2241(b)(2)(E). For China-based issuers, the most significant restriction is the prohibition on including “projections that are not based on the issuer’s publicly available financial statements.” Given that a newly public China company typically has only one or two quarters of public financial data, the SEC views any forward-looking revenue or earnings projections as speculative unless they are explicitly derived from the prospectus. The SEC’s 2025 Staff Legal Bulletin No. 14P reinforced that research reports “may not include projections that are based on non-public information or that assume events that are not reasonably likely to occur.”

The VIE Structure Disclosure Requirement in Research Reports

FINRA Rule 2241(b)(2)(E)(ii) requires that research reports “clearly and prominently disclose the nature of any relationship between the broker-dealer and the issuer.” For a China-based VIE-structure issuer, this disclosure must include a statement that the issuer does not own the operating companies in China through equity but through contractual arrangements, and that this structure carries specific legal risks under PRC law. The SEC’s 2023 Staff Legal Bulletin No. 14N (superseded by No. 14P) had already established that research reports on VIE-structure issuers must include a risk factor disclosure “in a prominent location” that the VIE structure “may not be enforceable under PRC law.” The 2025 bulletin No. 14P maintained this requirement and added that the disclosure must be “in the same font size and style as the body of the research report,” not in a footnote. For the 8 VIE-structure issuers that filed F-1s in Q1 2025, each of the lead underwriters’ compliance departments confirmed that the VIE risk disclosure would appear in the first paragraph of the research report, not in a disclaimer at the end.

The Valuation Methodology Restriction for China ADRs

SEC Rule 139(c)(2) prohibits research reports from containing “any valuation that is not based on a methodology that the broker-dealer has previously used in research reports on similarly situated issuers.” For a China-based issuer in a sector with few comparable US-listed peers (such as Chinese education technology or local services), this restriction effectively forces the analyst to use a valuation methodology that may not be appropriate. The SEC’s 2025 Staff Legal Bulletin No. 14P clarified that “similarly situated issuers” means issuers “in the same industry with similar market capitalizations and growth profiles.” For a China-based VIE-structure issuer with a market capitalization of USD 500 million to USD 1 billion, the pool of comparable US-listed issuers is extremely limited. As of 31 March 2025, there were only 14 US-listed China ADRs with market capitalizations between USD 500 million and USD 1 billion, according to Bloomberg data, and they span 8 different industry sectors. This lack of comparability means the valuation methodology in the first research report is often criticized by investors as unreliable, which explains why the average first research report on a China IPO in 2024 contained a price target range of 30% (e.g., USD 12-16), compared to 15% for US domestic IPOs in the same period.

Actionable Takeaways for China-Based Issuers and Their Advisors

1. For a first-time US IPO issuer from China, the pre-filing research blackout is absolute — no syndicate bank may publish research before the F-1 filing, and the SEC’s “regular course of business” safe harbor under Rule 139(a) is unavailable because no prior research coverage exists.

2. The effective quiet period for a China ADR IPO is 40 calendar days after the effective date, not 25, because FINRA Rule 2241(b)(2)(D) imposes a 40-day restriction on research reports containing any projections or valuations, which is standard for all newly public China companies.

3. For dual-listed China issuers, the HKEX 10-business-day quiet period under Listing Rule 10.06 may extend the total blackout to 54 calendar days or more when the Hong Kong listing occurs after the US pricing, and the compliance cutoff must be the earlier of the two jurisdictions’ start dates.

4. Every research report on a VIE-structure China issuer must include a prominent risk disclosure about the enforceability of the VIE contractual arrangements under PRC law, with the disclosure in the same font size and style as the body text, not in a footnote, as mandated by SEC Staff Legal Bulletin No. 14P (2025).

5. The valuation methodology in the first research report on a China IPO must be based on comparables from the same industry and similar market capitalization range, but with only 14 eligible China ADRs in the USD 500 million to USD 1 billion range as of Q1 2025, the analyst should prepare a sector-agnostic valuation framework before the F-1 filing to avoid a methodology conflict on day 41.