Legal Definitions - tombstone

Definition: A tombstone is an advertisement, typically found in a newspaper, that describes a public securities offering and identifies the sellers. The ad is traditionally printed with a black border and plain print, hence the name "tombstone." This type of advertisement is also known as a tombstone advertisement or tombstone ad. It is different from a prospectus, which provides more detailed information about the securities being offered.

Example 1: A company is planning to issue new shares of stock to the public. To promote the offering, the company places a tombstone ad in a financial newspaper. The ad includes basic information about the stock, such as the number of shares being offered and the price per share, as well as the names of the underwriters and other parties involved in the offering.

Example 2: An investment bank is helping a client sell a bond issue. The bank creates a tombstone ad that appears in several newspapers. The ad provides key details about the bond, such as the interest rate, maturity date, and credit rating, as well as the names of the bond issuer and underwriters.

These examples illustrate how tombstone ads are used to promote public securities offerings and provide basic information to potential investors. They are a way for companies and underwriters to generate interest in a new security and attract buyers.