Testing the waters legends: what every page, ad, email and video must say
The required testing the waters statements under Reg CF, Reg A and Rule 241, with practical guidance for pages, ads, email and video.
By Bryce W Jones10 min read
A testing the waters disclaimer has to travel with the communication that asks for investor interest. Putting the required statements on a landing page does not automatically cover the ad, email, video or live pitch that sends a person there. The language also changes with the exemption. A Reg CF campaign cannot borrow a Reg A legend and assume the difference is cosmetic.
Read this first. We are marketers, not lawyers. The descriptions and sample wording here may not comply with the rules for your offering. Have your securities counsel approve the actual legends and every communication that carries them before use. That includes the small ad, the confirmation email and the answer someone gives at an event.
The full rule text is linked below. Use it as the source for counsel-approved copy. The summaries here explain what each statement must convey; they are not a substitute legend to paste into an ad.
Which testing the waters statements apply?
There are three distinct routes. Reg CF Rule 206 applies before the Form C is filed. Reg A Rule 255 applies before the Form 1-A is qualified, including the period after it is publicly filed. Rule 241 applies while an issuer is considering an exempt offering but has not decided which exemption it will use. Each permits oral and written solicitation of interest. None permits collecting money or a commitment during its testing period.
| What the communication must state | Reg CF Rule 206 | Reg A Rule 255 | Generic Rule 241 |
|---|---|---|---|
| No money | No money or other consideration is requested; anything sent will be refused. | The same point. | The same point. |
| When a purchase can happen | Only after the Form C is filed, and only through an intermediary's platform. | Only after the Form 1-A is qualified. An offer can be withdrawn before the issuer gives notice of acceptance after qualification. | Only after the issuer selects an exemption and satisfies any filing, disclosure or qualification conditions that apply. |
| Effect of an indication | No obligation or commitment of any kind. | No obligation or commitment of any kind. | No obligation or commitment of any kind. |
| Additional statement | None in Rule 206(b). | After public filing, identify how to obtain the current preliminary offering circular or include it. | Say that the issuer has not yet selected an exemption. |
The critical differences are the event that allows a purchase, Reg CF's intermediary requirement, Reg A's withdrawal right and the extra post-filing circular information. These details are why a universal legend is a poor shortcut. For the precise text, see Rule 206(b), Rule 255(b) and Rule 241(b).
Rule 241 is not a way to keep an exemption undecided in the copy after the company has actually chosen one. Its first statement concerns the issuer's real decision. It is also an offer for antifraud purposes. If a later offering relies on Rule 506(b), the earlier public solicitation raises an integration question for counsel. The legal status of the campaign has to be decided before the creative goes out, not after.
What does the Reg CF legend do?
The first statement prevents a reservation form from looking like a checkout. Do not ask for a deposit or invite someone to send one. If money arrives anyway, the communication says it will not be accepted.
The second statement gives the investor two conditions: the issuer files its Form C, then the purchase happens only through the intermediary's platform. Filing alone does not turn the company's own site into a place to take orders. The third says the person who expresses interest has made no commitment. This follows Rule 206(a) and (b), which also bars acceptance of a nonbinding commitment before filing. A marketing label such as “reservation” cannot change that rule.
What changes for Reg A and Rule 241?
Reg A testing the waters may continue after the offering statement is publicly filed and before qualification. The purchase event is qualification, not filing. The required statement also tells the reader that an offer to buy can be withdrawn before the issuer accepts it after qualification. Once the statement is publicly filed, a Rule 255 communication must provide a way to get the latest preliminary offering circular. The rule gives three options: a contact with phone number and address, a URL, or the full circular. A stale link is a compliance problem because the rule calls for the most recent version. Rule 255(b) and (d) also address materially inaccurate or inadequate material used after filing.
Rule 241 starts earlier, before the exemption is selected. Its four statements tell the reader that the issuer is considering an exempt securities offering, has not picked the exemption, will accept no money, cannot accept a purchase until the chosen exemption's conditions are met, and treats an indication of interest as nonbinding. The generic label must be retired when the issuer chooses its path. Counsel should also review how that earlier public solicitation affects the chosen exemption.
Where should the disclaimer appear?
The rules say the communication must state the required information. They do not provide a universal pixel position, font size or “above the fold” test. Our conservative operating rule is to place the statements where a reader or listener encounters the request for interest, in each version of each channel. On a landing page, put them near the form and make them easy to see on a phone. A footer alone is a poor place for text that qualifies the form's central promise. Counsel decides the final prominence and placement.
| Channel | Practical placement to review with counsel |
|---|---|
| Landing page | Beside or above the interest form; check the mobile view and the submitted state. |
| Paid social | In the ad communication itself where the format permits. Keep the full statements on the destination too. |
| Search and other short placements | Check the actual character limit before buying the placement. Some formats may not work. |
| Email and text | In each message soliciting interest, including follow-ups. Do not rely on the first send. |
| Video | Make the statements visible and intelligible in the creative; review whether the spoken script should carry them too. |
| Audio-only and live remarks | Have the speaker deliver the required information audibly. |
| Social replies and direct messages | Treat an issuer's reply about the contemplated offering as its own communication. Use approved responses. |
There is one important format exception, and it is narrow. In SEC staff interpretation 182.09, the staff says it will not object to an active hyperlink for Reg A Rule 255 statements when a platform's real character limit prevents the full statements from fitting with the other information. The link must lead to the required statements, and the message should signal that important information is there where possible. If the full text fits, the hyperlink shortcut is inappropriate. That interpretation does not say the same thing about Reg CF Rule 206 or generic Rule 241. Do not transfer it to those campaigns without counsel's analysis. A destination page carrying full legends does not, by itself, prove that a short ad satisfied the rule.
The same care applies to video and audio. The rules expressly reach oral communications, but they do not specify a subtitle duration or require one particular spoken sentence. For a video, show the legends long enough to read and have counsel review the audio and on-screen treatment together. For a podcast or live pitch, make a short, approved spoken version part of the script. An inaudible legal slide at the end is a weak answer to a rule that covers the spoken solicitation.
Comments create the same problem at smaller scale. Someone asks whether their “spot” is secured, and a team member answers from a phone. The answer can undo the meaning of the original legend. Put the approved language in the comment policy and train the person who responds. The live-offering version of that problem is covered in moderating-comments-during-a-raise.
Which words around the legend cause trouble?
A legend does not cure an offer that says the opposite. Rules 206, 255 and 241 treat these communications as securities offers for antifraud purposes. The surrounding claims must be accurate, including statements about the company and the contemplated terms. Rule 206(a), Rule 255(a) and Rule 241(a) say so explicitly.
| Wording to avoid | Why it misleads | A more accurate direction for counsel to review |
|---|---|---|
| “Reserve your shares” or “secure your allocation” | Implies the person holds securities or a place in a legal queue. | “Tell us if you are interested in the contemplated offering.” |
| “Lock in your price” | Implies a term is fixed and an interest form protects it. | Describe a proposed price as preliminary, if counsel approves stating one. |
| “Pre-order equity” or “invest now” | Sounds like a transaction before one is permitted. | Invite a nonbinding indication of interest. |
| “Guaranteed return” | Claims an investment outcome nobody can promise. | Remove it. |
| “Only a few spots left” | May imply a real allocation limit or scarcity that has not been established. | State a verified offering fact, if there is one, with counsel's approval. |
| Countdown to an unapproved launch date | Makes an uncertain filing or qualification date look fixed. | Give no date until it is supportable and approved. |
Price, valuation, security type and proposed minimum are not categorically forbidden subjects during testing the waters. Each one raises a practical question: if the final offering differs, what will the person believe the earlier page promised? A range or a clear description of an estimate may be more honest than a precise term, but even that needs review. Silence is better than a number the issuer cannot defend. In Reg CF, a stated price becomes a term of the offering once the offering is live, changing the advertising rule. That transition is covered in advertising-rules-by-exemption.
Projections deserve particular care. The federal statutory safe harbor for some forward-looking statements in Securities Act Section 27A generally applies to issuers already subject to Exchange Act reporting, with additional exclusions. It is not a blanket shield for an ordinary non-reporting Reg CF issuer. A projected revenue chart in a testing the waters ad remains an offer subject to antifraud law. Have counsel examine the basis, assumptions and presentation before publishing it.
A check before any asset ships
- Identify the exemption and whether the offering statement is unfiled, filed or qualified.
- Compare the exact legend to the applicable rule. For Reg A after public filing, check the current preliminary circular access information.
- Inspect the whole communication: headline, button, form, image, caption, reply and confirmation state.
- View the real placement on a phone. Confirm a person can see or hear the required information where the interest request appears.
- Check every number, date, scarcity claim and projection against the record counsel reviewed.
- Archive the approved version and the version that actually ran. Keep the legends in the capture.
- Repeat the review when the page, ad or offering stage changes.
A good legend makes the status of the offering clear. It does not have to bury the pitch. It has to survive contact with the pitch, the placement and the person answering the reply.
This is general information, not legal advice. Your securities counsel and intermediary should approve the language and distribution plan for your offering.
FAQ
What disclaimer is required for testing the waters?
It depends on the exemption. Reg CF Rule 206 has three required statements, Reg A Rule 255 has three plus access to the preliminary circular after public filing, and generic Rule 241 has four. The precise text is in the linked rules; counsel should approve the version you use.
What are the three required statements for Reg CF testing the waters?
The communication must say no money is requested or accepted; no purchase can be accepted before the Form C is filed and then only through the intermediary's platform; and an indication of interest creates no obligation or commitment. Read Rule 206(b) for the controlling wording.
Do testing the waters ads need the disclaimer?
Yes. An ad asking for interest is a communication under the rule. A landing page with the full text does not automatically fix an ad that omits it. Reg A has a narrow SEC staff hyperlink interpretation for genuine character limits; do not assume it applies to other exemptions.
Does a testing the waters video need the legends?
Yes, the video is a communication soliciting interest. The rule does not prescribe an exact on-screen duration or audio treatment. Have counsel review a readable on-screen treatment and the spoken script, including how the video appears in each placement.
Can you say “reserve shares” during testing the waters?
That phrase suggests an allocation or commitment the interest form cannot create. Say that the person can indicate interest without obligation, using language approved for the offering.
Can you state a share price during testing the waters?
Potential terms can be discussed, but a price can change and cannot be presented as locked by an indication of interest. Counsel should review whether stating a proposed price is supportable and how the uncertainty is explained.
Where does the testing the waters disclaimer go on a landing page?
The rule does not set a universal page position. Put the required statements next to the interest request where they are readable on mobile, and have counsel review the final layout. A footer-only treatment is risky for a page built around a form.