Nutanix CEO Quiet Period Interview Imperils IPO?

| About: Nutanix (NTNX)

Summary

Nutanix's imminent IPO is slated to be a major tech offering.

Company CEO Dheeraj Pandey's interview on Network World may violate the SEC's strict IPO quiet period rules.

The company quickly filed a Free Writing Prospectus to attempt to comply with disclosure requirements.

Nutanix (NASDAQ:NTNX) CEO Dheeraj Pandey has potentially imperiled his company's long-awaited IPO by participating in a wide-ranging interview published yesterday.

Appearing on Network World's website, the interview features Pandey discussing Nutanix's partnership with Dell Technologies (NYSE:DVMT), its competitive rivals, market size and revenue breakdowns and numerous other topics.

The interview, 4,800 words in length, may violate the SEC's quiet period rules ('waiting period' in SEC terms) that prohibit most communication outside of the offering prospectus.

As the SEC states: "A quiet period extends from the time a company files a registration statement with the SEC until SEC staff declare the registration statement "effective".

The purpose of a quiet period is to prohibit companies from making comments about information that might cause investors to change their opinion on the upcoming IPO.

In response, the company quickly filed a Free Writing Prospectus, or FWP, which contained the full interview and incorporated it into its S-1/A Registration Statement.

The Nutanix FWP also contained clarifying statements in addition to the interview.

A Free Writing Prospectus is a written communication that must adhere to specific SEC guidelines, including that it cannot be inconsistent with the actual prospectus.

FYI, law firm Morrison & Foerster has an excellent summary of best practices for FWPs here.

If the SEC believes that Pandey's pre-IPO interview had a "gun jumping" effect, it can refuse to declare the registration effective and impose a 'cooling off' waiting period.

With a major interview appearing in an online publication just days before the IPO is expected to price, the timing could not be more questionable.

Time will tell if the SEC looks kindly on this.

In my recent articles on Nutanix, here and here, I have taken a bullish view of the IPO.

I continue to remain excited about the company's future potential, notwithstanding its CEO's verbal indiscretion.

However, I recommend you review the full interview and FWP before taking any action.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.