In June 2011, Groupon, Inc. fi led a registration statement on Form S-1 with the SEC to register the initial public offering (IPO) of its Class A common stock. In an attempt to counter the negative press about the company on the verge of its IPO, on August 25, 2011, Andrew Mason, the Chief Executive Offi cer of Groupon, Inc., sent an email to employees promoting the company’s business performance and summarizing his excitement about the company by saying that “all the stuff that one would want to look good? It looks good.”13 This email was leaked to the press, and allegedly delayed Groupon’s road shows.14
At the time of the distribution of the email, Groupon was in the waiting period (the period of time after an issuer fi les its registration statement but prior to the time such registration statement is declared effective by the SEC) in conjunction with its IPO. During the waiting period, a company’s dissemination of information promoting the company to the general public, through means other than the registration statement, may be considered impermissible gun-jumping, which can result in the imposition of certain penalties, required inclusion of the “gun-jumping” information in the company’s registration statement or delay the IPO.
On September 23, 2011, Groupon fi led with the SEC an amendment to its Form S-1, which included (i) excerpts from Andrew Mason’s August 25th email and (ii) a risk factor cautioning investors not to rely on the information in this email without reviewing the entire prospectus and clarifying certain information contained in the email.
A company should restrict any publicity during the registration process. It is best to avoid sending mass emails to your employees hyping the company during such process. These communications are too likely to be leaked to the general public and be deemed impermissible gun-jumping.