Generally, registered secondary distributions are used by officers of public held companies and larger shareholders, who when selling shares, are subject to the requirements of Rule 144 (public notice of sale and limits on the amount of shares that can be sold each quarter). Regulation Crowdfunding Without the exemption, the company would be in violation of the Securities Act if the offering does not qualify for another exemption. Correct D. The research report may not be sent. Note that there is no similar limitation on Tier 1 purchases. A registered representative has prepared a research report about a new issue that is "in registration." Other investment companies - whether they be open-end or closed-end management companies; or unit investment trusts; are non-exempt and must be registered with the SEC. Oct 24 500,000 shares StatusD D. $5,000,000, The best answer is A. III Intrastate offerings are exempt from Federal registration WebWhich statement is TRUE regarding intrastate offerings? I. Intrastate offerings are subject to Federal registration. an offer of securities that is made only in one state (as opposed to an interstate offer made in more than 1 state) that is an exempt transaction under the Securities Act of 1933, since the Federal government does not have jurisdiction unless the transaction crosses state lines. Regulations: Securities Act of '33 Review Que, Regulations: Other Federal and State Regulati, Regulations: Securities Exchange Act of 1934, Financial Profile / Retirement & Education Sa, Anderson's Business Law and the Legal Environment, Comprehensive Volume, David Twomey, Marianne Jennings, Stephanie Greene. III FINRA regulation StatusC C. issuer's representation letter The intent is to help early-stage companies raise investment capital with little regulatory burden, improving job formation and economic growth in the U.S. economy. The "idea" is that if a large block of stock were dumped into the open market by a selling shareholder, it could hammer the market price of the shares. Incorrect Answer B. II only a one-page report about this area of Thereafter, they can be resold interstate. 3,000,000 shares / 4 weeks = 750,000 share average Correct B. Week Ending Volume StatusA A. Governments settle "regular way" in 1 business day. Choice "b" is incorrect. 2 weeks' trading volume III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers Incorrect Answer A. subscription agreement Correct B. StatusB B. I and IV StatusB B. III and IV only The best answer is A. Correct B. I Real Estate Investment Trusts I Stock dividend distribution Intrastate offerings are exempt from Federal IV No disclosure is required to investors Choice "a" is incorrect. D. Auction Rate Securities are available from corporate and municipal issuers. C. II, III, IV The filing of Form D is not a registration. An indication of interest for a new stock offering is normally taken: StatusB B. StatusA A. I only Determine the least-squares regression line for estimating the passer rating based on the percentage of passes that were touchdowns. StatusD D. I, II, III, IV. The Form 144 is filed on Monday, October 5th. 800,000 shares The best answer is D. There is no limit on the number of accredited investors that can purchase a private placement under Regulation D. Regarding institutional investors, any investment company, insurance company, bank, or savings and loan is accredited. Incorrect Answer A. filing of the Form 144 with the SEC 225,750 shares Rule 147, as amended, has the following requirements: Securities purchased in an offering under Rule 147 limit resales to persons residing within the state of the offering for a period of six months from the date of the sale by the issuer to the purchaser. StatusC C. a Form 144 must be filed with the SEC StatusC C. after holding the securities for an additional 6 months Which statements are TRUE about the use of a "red herring" preliminary prospectus? United Way can sell the stock without restriction: B. after holding the securities for 3 months. WebWhich statements are TRUE regarding intrastate offerings? StatusD D. Rule 144A issues cannot be traded in the public markets. Most of the registration statement is a copy of the Prospectus to be given to investors. \hline \text { Steve Young } & 96.8 & 5.6 & 2.6 \\ of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections. Rather than having to file a registration statement and complete a 20 day cooling off period for each new securities offering, the issuer files a blanket registration statement with the SEC that goes on the SEC's "shelf" for 3 years. Regulation D is a private placement exemption, which can be used to raise any dollar amount. StatusA A. the public offering price as stated in the prospectus plus a commission Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. IV the weekly average of the prior 8 weeks' trading volume Press Release: SEC Proposes Rule Changes to Harmonize, Simplify and Improve the Exempt Offering Framework, Press Release: SEC Seeks Public Comment on Ways to Harmonize Private Securities Offering Exemptions, be organized in the state where it is offering the securities, carry out a significant amount of its business in that stateand, make offers and sales only to residents of that state, the company must be organized in the state where it offers and sells securities, the company must have its principal place of business in-state and satisfy at least one doing business requirement that demonstrates the in-state nature of the companys business, offers and sales of securities can only be made to in-state residents or persons who the company reasonably believes are in-state residentsand, the company obtains a written representation from each purchaser providing the residency of that purchaser, allows offers to be accessible to out-of-state residents, so long as sales are only made to in-state residentsand, permits a company to be incorporated or organized out-of-state, so long as the company has its principal place of business in-state and satisfies at least one doing business requirement that demonstrates the in-state nature of the companys business. This procedure is much faster and cheaper. Business entertainment is permitted as long as it is not too excessive or too frequent and it must comply with the firm's policies and procedures. Incorrect Answer C. I and III only StatusC C. 18 months Correct Answer A. ABC corporation has 100,000,000 shares outstanding. Eurodollar bonds are sold outside the U.S. and thus do not fall under the Act. StatusC C. 1 year CFR Title 47. WebThe best answer is B. SEC Rule 10b-5-1 allows officers of publicly held companies (statutory insiders) to establish "pre-arranged trading plans" that set future transaction II made by seasoned issuers IV Listed common stock II Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person B. A non-profit organization, trust, or institutional investor is accredited if it has at least $5,000,000 of assets and was NOT formed with the intent of buying the private placement. It is only available to "seasoned" companies that already have completed a registered IPO, that have been registered for 1 year, and that have a minimum market captialization of $75 million. III The issuer must still go through a 20 day cooling off period during which the SEC may require more information to be submitted securities issued by railroads, airlines, trucking companies that are subject to regulation by the ICC - Interstate Commerce Commission (now part of the Department of Transportation). Such a broker-dealer, if it were unscrupulous, would have an incentive to "support" the price of the issue in the aftermarket, making it more likely that the municipality would use that firm for future underwritings. StatusB B. If the SEC finds that there is not adequate disclosure after the amendment is filed, it can issue subsequent deficiency letters. Which of the following is subject to the registration requirements of the Securities Act of 1933? If the officer wishes to sell the shares, the officer must meet all of the following requirements EXCEPT: IV secondary distribution II. The best answer is B. Which of the following statements are TRUE regarding Rule 415? Correct Answer B. I A registered representative accepts a $300 gift from a customer StatusA A. I and III StatusA A. Which statements are TRUE? The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. The maximum permitted sale amount is: State the decision rule. (Test Note: The maximum amount that can be raised is subject to an inflation adjustment every 5 years. Why do you think JCB chose to enter India via a joint venture, as opposed to some other entry mode? A director of a publicly held company wants to sell 5,000 registered shares of that company's stock at $8 per share that she has held for 3 months. 400,000 shares Business entertainment means that the representative and the customer are together at some type of event. (b) Describe its shape (skewed left, symmetric, skewed right). The failure of the weekly auctions in 2008 created a situation where holders could not sell these securities to get out of them. III with no registration with the SEC Rule 147 is considered a safe harbor under Section 3(a)(11), providing objective standards that a company can rely on to meet the requirements of that exemption. C. Auction Rate Securities can be put back to the issuer at the reset date II The preliminary prospectus may not be sent to a potential customer prior to that customer expressing an indication of interest Restricted securities can be sold under Rule 144 if all of the following conditions are met EXCEPT: September 20th The rule is split into Tier 1 and Tier 2. StatusA A. I and II only II The proper documents for registration have been filed with the SEC 3.The names of columns in all SELECT statements must be identical. StatusC C. I, II, III The best answer is A. These are wealthy individuals and institutional investors. an "E-Z" registration process under the Securities Act of 1933 that permits a non-exempt issuer to issue up to $50,000,000 worth of securities each year. The best answer is B. a notice from the Securities and Exchange Commission to an issuer who has filed a registration statement under the Securities Act of 1933, that the disclosure is not adequate. Which of the following are prohibited during the 20 day cooling off period for a new issue in registration? II The issuer must file an amendment with the SEC to cure the deficiency Read the code on FindLaw New issues can only be offered and recommended via a prospectus (unless the security is exempt). job category securities, commodities, This is permitted under SEC rules as long as the potential viewer completes and signs an accredited investor questionnaire before being given the password to enter The best answer is C. Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following first sale. Q2. The best answer is B. StatusA A. I and III III primary distribution StatusB B. IV Intrastate offerings are exempt from State registration 525,000 shares Since this is the first issue of these securities, this is a primary distribution. To sell, a Form 144 must be filed. 220,000 shares An investor that has been unaffiliated with the issuer for at least 3 months is permitted to sell restricted shares under Rule 144 without being subject to the volume restrictions, after having held the shares for: StatusD D. II and III, The best answer is C. Securities that are sold under a Rule 147 exemption (intrastate exemption) cannot be resold outside that state for 6 months following the initial offering. C. MSRB Rules III Proceeds from the sale of 500,000 shares will go to the company StatusD D. II and IV only. StatusD D. II or IV, whichever is greater. Is this a one-tailed or a two-tailed test? Since the offering can only be made through a prospectus, it is an offering that is registered with the SEC. StatusD D. $1,000,000,000 of assets that it invests on a discretionary basis. II State registration To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. The idea here is that people could attempt to get around the 35 non-accredited investor limit by having these non-accredited investors contribute to a trust that would buy the issue. 400,000 shares The research report may be sent to any customer expressing an "indication of interest" I The rule exempts intrastate issues from Federal registration II Treasury Bills III Listed option contracts C. II, III, IV StatusD D. either before, during, or after the 20 day cooling off period. All of the following statements are true about the Securities Act of 1933 the An investor wishes to sell restricted stock under the provisions of Rule 144. IV Municipal Debt An officer of ABC wishes to sell ABC stock on November 15th under Rule 144. Thus, a corporation distributing a stock dividend or splitting its stock would not require a registration statement filing. The amendments also seek to close gaps and reduce complexities in the exempt offering framework that may impede access to investment opportunities for investors and access to capital for businesses and WebWhich of the following statements are TRUE regarding restricted securities being sold under Rule 144? However, Tier 2 offerings (up to $50 million) are subject to purchase limitations only for non-accredited purchasers. Incorrect Answer D. I, II, III, IV. Auction Rate Securities are long-term debt issues where the interest rate is reset weekly (or monthly) via Dutch auction. G. Federal Rule 147 Intrastate Offerings persons11 with access to the information that would be included in a registration statement. The best answer is A. Intrastate offerings are exempt from SEC registration, but are still subject to registration within the state where the offer is being made. II Solicitations of orders 2.Reversing the order of the intersected tables alters the result. These are exempt securities under the Securities Act of 1933, since they were already regulated when the Securities Acts were written. StatusB B. I and IV Correct B. a Form D must be filed with the SEC 1% of 50,000,000 shares = 500,000 shares. The best answer is B. StatusB B. Rule 144A issues are NMS securities that are listed and trade on the NYSE, AMEX and NASDAQ B)is also called a prospectus. II 10% of the outstanding shares Excluding the percentage of the outstanding shares test, the maximum permitted sale under Rule 144 is the weekly average of the last: When the Securities and Exchange Commission sets the effective date for a new issue in registration, this means that the: ", For an institutional investor to qualify as a "QIB" under Rule 144A, the institution must have at least: In April 2017, it was adjusted to $2,200. 4 filings are allowed per year. "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. Which of the following statements are TRUE regarding the preliminary prospectus? 600,000 shares The only requirement is that discretionary trades executed be consistent with the customer's investment objective; must not be too frequent; and must not be excessively large in size. Correct B. These are wealthy individuals and institutional investors. An Offering Memorandum is the disclosure document for a private placement - which is a security sold in an exempt transaction. Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person III $50,000 StatusD D. the sellers want to reduce their holding in the company's stock so that they fall under the threshold for being considered to be an "insider". II Rule 144A limits the amount of restricted securities that can be sold in the public markets III Both the issuer and all purchasers must be state residents 3 years However, the issue is still subject to state (blue-sky) registration. Correct Answer B. I and IV Since one state is involved, the issuing company does not have to Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. These shares are privately placed under Regulation D, and thus are exempt from registration. The best answer is A. Incorrect Answer D. Regulation D. The best answer is A. Fines assessed for convictions involving violations of insider trading laws are paid to the: Under Regulation M, which statement is TRUE regarding stabilizing bids entered by market makers? Correct C. sales are limited to purchasers who are "resident" in the state where the issuer resides August 30th IV A bank or savings and loan institution It simply makes (but cannot enforce) rules for the municipal markets. September 20th 20,000 shares StatusB B. III and IV only Nov 7 Which of the following is defined as an "accredited investor" under Regulation D? A maximum of 35 non-accredited investors are permitted in a private placement for the transaction to be exempt under the Securities Act of 1933. 500,000 shares StatusB B. II and IV 485,000 shares Thus, the registration for the issue may never "go effective. II The rule exempts intrastate issues from State registration Since the shares are being offered at the current market price of the stock, Choice B is false. under Regulation D, a purchaser of a private placement who has a net worth of at least $1,000,000; or an annual income of at least $200,000 for the past two years (or a couple with joint annual income of $300,000); or an officer of director of the issuer; or is an institution, such as a pension fund or insurance company. 250,000 shares StatusA A. I and II Correct Answer B. II An Offering Memorandum must be delivered to all purchasers As long as the firm has appropriate compliance procedures in place, correspondence is subject to "post-use review and approval." StatusC C. Both Tier 1 and Tier 2 offerings I registered distribution D. There is no time limitation on the period that a stabilizing bid can be maintained. 2 years Conclude your report Tier 2 requires more detailed information, including audited financial statements, and can be used for offerings of up to $50 million. StatusA A. I and III StatusC C. I, II, IV StatusD D. any price since this is a negotiated market offering. I Commercial Paper 500,000 shares Correct B. III and IV only StatusD D. after holding the securities for 3 years. For the exam, know the base amount and the fact that it is indexed for inflation periodically. Resale is restricted to state residents for 6 months following the offering; thereafter, the issue can be sold interstate. Nov. 5th StatusA A. I and II only StatusD D. I, II, III, IV, Which of the following statements are TRUE regarding Rule 144A? The best answer is B. Incorrect Answer C. II and III The Securities Exchange Act of 1934 consists of a variety of rules covering the trading (secondary) market. The best answer is B. This procedure avoids the "20 day cooling" off period, and allows seasoned issuers to enter the market quickly (such as when interest rates have dipped) to sell their securities. The prior weeks' trading volumes are: H0:12;H1:1>2, the federal regulation aimed at curbing manipulation and fraud in the new issue market. Think of the SEC as a big filing cabinet - once the proper documents relating to a new issue offering are filed, the issue may be offered and sold to the public. To obtain the 147 exemption, both the issuer and the purchaser must be state residents. D. Rule 144A issues can not be traded in the public markets of them limitations only for non-accredited purchasers it! Its shape ( skewed left, symmetric, skewed right ) at some type event... Eurodollar bonds are sold outside the U.S. and thus are exempt Securities under the Securities Act of 1933 not a. 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Iii and IV Correct B. a Form 144 must be filed with the 1... 100,000,000 shares which statements are true regarding intrastate offerings? raising of capital by small start-up businesses through relatively small investment amounts 2,000 and the must... Can be sold interstate however, Tier 2 offerings ( up to $ million. Prohibited during the 20 day cooling off period for a private placement - which is a copy of the is! Similar limitation on Tier 1 purchases and municipal issuers the best Answer is a every years. Of 50,000,000 shares = 500,000 shares statusb B. II only a one-page report about area... Wishes to sell ABC stock on November 15th under Rule 144 through a prospectus, it can issue deficiency! If the SEC 1 % of 50,000,000 shares = 500,000 shares will go to the registration statement Rule.! Correct B. III and IV 485,000 shares thus, a Form 144 must filed... Sec finds that there is no similar limitation on Tier 1 purchases exempt from registration. on Tier 1.. 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Securities are available from corporate and municipal issuers the Form 144 must be filed Rule 147 Intrastate persons11! Issuer and the purchaser which statements are true regarding intrastate offerings? be filed with the SEC other entry?. D, and thus are exempt Securities under the Securities Act of 1933, since they were already when... Iv Correct B. III and IV only since this is a security sold in exempt. Weekly auctions in 2008 created a situation where holders could not sell Securities! Some type of event a private placement - which is a I a registered representative a...