What is a prospectus?

A prospectus is a formal document that provides investors with detailed information about an investment opportunity. It is required by the Securities and Exchange Commission (SEC) for all publicly-traded investments, such as stocks, mutual funds, and bonds. A prospectus is usually written by the issuer of the security (such as a company offering stock) and must be filed with the SEC. A prospectus typically includes important information about the investment vehicle, including a description of the company’s business, the risks associated with investing, the amount of money being raised, who will receive the money, the plan for the use of proceeds, and the type of security being offered. Prospectuses are written in a clear, legal language so that investors can make an informed decision about whether or not to invest. In North Carolina, investment fraud law is enforced by the North Carolina Commissioner of Banks, the state’s banking regulator. Prospectuses are an important tool for preventing and detecting fraud, as they alert investors to potential risks and allow them to evaluate the suitability of an investment before they commit funds. North Carolina’s investment fraud law also sets forth specific requirements for the contents of a prospectus, so investors can be confident they will receive all the necessary information when they make an investment decision.

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What is a prospectus?

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