Financing a start$-$up company

After the stock market crash in $1929,$ the Securities and Exchange Commission $($SEC$)$ was established to protect investors from fraudulent investments and to regulate the securities industry.

Based on your understanding of SEC regulations, which of the following statements are true? Check all that apply.

As soon as a company decides to sell stock to prospective investors, it starts to advertise in order to increase the marketability of its new shares.

Companies are liable for all of the information presented in the prospectus.

The SEC does not allow companies to specify or limit which groups or types of investors to whom a company can issue securities$.$

The red herring prospectus can be distributed to potential investors, but the sale of the issuing company's stock cannot be finalized during the $20-$day wait period.

In most public offerings, investors are classified based on their profiles. Individuals of high net worth, institutional investors, senior executives, and directors of companies are referred to as

A company has to grow to a certain level before it can successfully raise capital by selling its stock to the public. At different stages, a company has different financing needs; it raises capital by reaching out to different kinds of investors.

Consider this case: