Red herring refers to the due diligence at the company IPO to gain public trust and approval from government agencies. Red Herring Prospectus, is called the preliminary prospectus, in addition to the specific issuing price, it contains almost all the information about the listing and issuance. Although it does not include a specific price, it includes the range of the issuing price. Usually, as soon as the registration statement is submitted, the underwriter begins to issue the preliminary offering statement. Since the securities registration has not yet taken effect, SEC requires that the specification must be stated in scarlet letters on the cover (see picture below for example). The red herring is named after it.