What is a Hot Issue as it relates to securities law?
If the price for an IPO (an initial public offering) increases in the first day of trading, it is considered a hot issue. Owners and employees of brokerdealers and other industry insiders are prohibited from participating in hot issues. A prohibited owner or employee is generally allowed to begin trading in the aftermarket. The trading that occurs after an initial public offering (IPO) is the aftermarket.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.