III Recommending the purchase of the issue 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? StatusD D. 1 year. StatusC C. the issuer needs to raise substantial funds from its selling shareholders for some business purpose that is detailed in the prospectus II Gift of baseball tickets with a value of $75 known as the "shelf registration rule," this is a streamlined registration process under the Securities Act of 1933 for large, established companies. II Treasury Bills Correct D. 4. (Test Note: The maximum investment amount and the maximum amount that can be raised are subject to an inflation adjustment every 5 years. It simply notifies the SEC that the issue is being offered in compliance with the exemption. II State registration 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. StatusD D. no filing is required with the SEC. Week Ending Volume (see Cooling off period), If the SEC sends a deficiency letter to the issuer regarding an issue in registration, which of the following statements are TRUE? Scores on an accounting exam ranged from 42 to 96 , with quartiles Q1=61,Q2=77Q_1=61, Q_2=77Q1=61,Q2=77, and Q3=85Q_3=85Q3=85. Correct Answer C. 3 years StatusB B. after holding the securities for an additional 3 months $100,000 IV Spin off of a subsidiary as a publicly held company StatusB B. II and IV 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. StatusA A. The best answer is A. These are private placement securities that are exempt from registration with the SEC. an exempt transaction under Regulation D that can be sold without a prospectus to an unlimited number of accredited (wealthy) investors, but only to a maximum of thirty-five (35) non-accredited investors. II 5,000 shares StatusB B. D. II and IV The bank that structures the ADRs handles the registration. Week Ending Volume September 27th 18,000 shares 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 This offering is a(n): Control shares are registered shares owned by a key officer or director. The best answer is B. Correct Answer C. proper documents for registration have been filed with the SEC To obtain the 147 exemption, both the issuer and the purchaser must be state residents. October 4th 16,000 shares a. "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. Legally, these are not considered to be offers of the security. Incorrect Answer A. this is a new issue offering of a non-exempt security that must be registered with the SEC and sold to the public with a prospectus under the requirements of the Securities Act of 1933 I The SEC has certified that the offering documents give full and fair disclosure StatusA A. I only StatusA A. I and III these securities are issued by banks A The best answer is B. Search/A-Z Index link and enter the The use of the "preliminary prospectus" does not constitute an "offer" under the 1933 Act, and the red ink statement on the cover of the preliminary prospectus states this (hence the name "red herring"). StatusB B. after holding the securities for 90 days ABC corporation has 100,000,000 shares outstanding. StatusD D. 24 months, The best answer is A. 12 months Non-accredited investors buying a Tier 2 Regulation A offering cannot invest an amount that is the greater of 10% of that person's annual income or net worth. Which of the following securities are NOT required to be registered with the SEC? Correct A. I and III The best answer is B. StatusB B. September 20th 20,000 shares StatusA A. I only The prospectus is the disclosure document for new issues that are not exempt from registration. Incorrect Answer A. subscription agreement IV at, or prior to, the placement of the order (see Non-exempt security, Prospectus). 2 years Because this sale is 5,000 shares @ $8 = $40,000, it can be done under this exemption. III U.S. Government Bonds Which of the following are exempt issues under the Securities Act of 1933? StatusA A. I only U.S. Government securities are guaranteed by the U.S. Government and have the government's direct backing. However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. 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: Governments settle "regular way" in 1 business day. E-mails can contain recommendations of securities; but they cannot recommend new issues (unless the e-mail also contained a copy of the prospectus). In addition, the terms of the offering must be filed with FINRA and must comply with FINRA rules. FINRA regulates the sale of limited partnerships. September 13th 19,000 shares Correct Answer D. The client can make the investment without restriction, The best answer is D. Crowdfunding offerings are targeted at small investors. 1,200,000 shares StatusA A. The best answer is C. StatusA A. the public offering price as stated in the prospectus plus a commission A. B)is also called a prospectus. II Resale of the securities is permitted outside that state immediately following the initial offering II Eurodollar Debt All of the following are exempt issues under the Securities Act of 1933 EXCEPT: The best answer is C. Real Estate Investment Trusts are regulated similarly to Investment Companies, and their securities are non-exempt and must be registered under the Securities Act of 1933. II. acronym for a "Qualified Institutional Buyer" as defined under Rule 144A. The best answer is B. StatusC C. II and III \text { Peyton Manning } & 94.7 & 5.7 & 2.8 \\ StatusD D. Regulation D. The best answer is C. The most probable reason why these shares are being offered by prospectus is that: The Securities Act of 1933 StatusB B. Incorrect Answer D. Regulation D. The best answer is A. IV Accepting a firm order from the customer Oct. 30th Do not confuse Rule 144A with Rule 144, which covers the sale of "restricted" and "control" stock in the open market. The best answer is A. The best answer is B. I by the seller of the restricted shares Week Ending Volume The issue must also be registered in the state(s) where it will be offered. Private placements are typically only offered to "accredited investors." An investor wishes to sell restricted stock under the provisions of Rule 144. However, if a corporation spins off a subsidiary to its shareholders, the shareholders are receiving stock in a different company, so a registration statement must be filed for those shares. 225,750 shares II The issuer must file an amendment with the SEC to cure the deficiency ), The maximum amount that can be invested by a client in a single issue under Regulation Crowdfunding is: Correct B. a Form D must be filed with the SEC StatusC C. II, III, IV The registration statement must be amended, and the 20 day cooling off period starts recounting from the date of the amendment filing. StatusD D. I, II, III, IV. I SEC registration Which statements are TRUE about the use of a "red herring" preliminary prospectus? Correct A. I and III Correct Answer B. 525,000 shares Rule 144 includes a "de minimis" exemption, permitting the sale every 3 months of 5,000 shares or less, worth $50,000 or less, without having to file a Form 144. Once the amendment is filed, the 20-day cooling off period starts counting again from the beginning. The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person The best answer is C. Form 144 does not have to be filed to sell restricted or control stock if 5,000 shares or less, worth $50,000 or less, is sold during each 90 day period. IV Up to 6 sales per year are allowed Second, I objected to part of proposed new Rule 147 that holds if an offering is conducted pursuant to an exemption from state law registration, the offering must be By using a manager, the stock will be sold in an orderly fashion into the market and the market price of the outstanding shares should not be adversely affected. Which SEC rule gives a simplified registration process to offerings of no more than $50 million within a 12 month time frame? Correct Answer B. the amount of stock held by the selling shareholders was restricted and was too large an amount to sell under the provisions of Rule 144 The Official Statement is the disclosure document for municipal bonds (which are an exempt issue). A. must be reviewed and approved in advance by a principal StatusC C. 3 IV sales of restricted stock Private placements under Regulation D are typically only offered to "accredited investors." September 27th 280,000 shares B. I and IV WebAll of the following regarding the official statement for a new municipal issue are true EXCEPT that it: A)meets disclosure requirements for purchasers of the new issue. StatusB B. I and IV 950,000 shares / 4 weeks = 237,500 shares Since this customer made the request by e-mail, we know that the customer has internet access and the firm can follow the customer's instructions. Once the registration is effective, the final prospectus is used to offer and sell the issue. Corporate distributions that result in an issuer distributing the exact same class of security to existing shareholders do not require a registration statement filing with the SEC. Incorrect Answer C. II and III Finally, the broker must represent that it did not solicit the transaction and that it acted as agent in executing the transaction. StatusC C. I, II, III A registered representative who handles the accounts of wealthy clients is told the StatusA A. The best answer is B. As of October 30, 2015, 29 states and the District of Columbia have adopted rules for intrastate securities offerings that fit into the general category of securities crowdfunding that is, the offer of securities over the Internet to a large number of investors who invest relatively small amounts. The filing of Form D is not a registration. Rule 144A issues are not listed and trade in the OTCBB or Pink Sheets b. StatusA A. before the 20 day cooling off period This amount can be sold every 90 days (every 3 months), so a sale can occur 4 times per year. The maximum size of single offering under the rule is $1,000,000. Read the code on FindLaw StatusB B. Correct Answer A. they are likely to be officers and large shareholders of the company who must sell their shares either under the provisions of Rule 144 or who must sell their shares in a managed offering so that the existing trading market for the stock is not distorted Industrial companies are not exempt from the Securities Act of 1933. A. I and II only The only way to resell them is in a "private transaction.". a. If the seasoned issuer wishes to sell any securities during this 3 year period, it simply files a notification with the SEC that it is selling under that registration statement. ARSs are available from both corporate and municipal issuers. This market is not available to individuals. PlayerRatingTD%Inter%SteveYoung96.85.62.6PeytonManning94.75.72.8KurtWarner93.25.13.4TomBrady92.95.42.4JoeMontana92.35.22.6CarsonPalmer90.15.13.1DaunteCulpepper89.94.93.2\begin{array}{lccc} If the SEC sets the "effective date" for an issue in registration, this means that all proper documents have been filed with the SEC. Oct 31 StatusD D. 515,725 shares. StatusA A. StatusB B. The registered representative must inform the customer that all prospectuses must be sent in hard-copy form to the customer's physical mailing address StatusC C. I, II, IV The best answer is C. Insurance company offerings are exempt from the 1933 Act with the exception of variable annuity and variable life contracts. The issue here is that there can be an inherent conflict of interest when such a relationship exists. The best answer is B. This procedure is much faster and cheaper. III 10 business days prior of the placement of the order 400,000 shares Section 3(a)(11) of the Securities Act is generally known as the intrastate offering exemption. This exemption seeks to facilitate the financing of local business operations. Choice "a" is incorrect. Correct D. The research report may not be sent. WebAll of the following statements are true about Rule 147 EXCEPT: A. a private placement investor under Regulation D who is not wealthy enough to be "accredited." The investor's spouse owns 5% of that company's stock. II State registration The VC funding will be given preferred stock with warrants, or convertible debt that the company has to The sample mean is 2.59. An indication of interest is taken during the 20 day cooling off period before a new issue's registration becomes effective. StatusB B. 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. Thereafter, they can be resold interstate. Note, however, the restricted securities may always be sold in a so-called "private transaction" - these are not considered to be public offers of that restricted security. B. Under Rule 147, intrastate offerings cannot be resold out of state for how long following completion of the initial offering? \hline \text { Steve Young } & 96.8 & 5.6 & 2.6 \\ II Advertisement of the issue September 20th 20,000 shares I Any purchaser who received a preliminary prospectus must also receive the final prospectus I Sale of the issue IV Rule 144A permits issuers to sell tradeable private placement units to individual investors C. Purchase a municipal bond where the broker-dealer has a control relationship with the issuer StatusB B. III and IV StatusC C. II and III 485,000 shares Oct. 23rd StatusA A. I and II only Excluding the percentage of the outstanding shares test, the maximum permitted sale under Rule 144 is the weekly average of the last: StatusA A. I and II only A small investor with $2,000 of available funds wishes to make a crowdfunding investment. Solicitation of orders to buy "144" shares is prohibited (to stop you from soliciting potential customers to buy 144 shares, which would tend to push up the stock price). The bank that structures the ADRs handles the registration. ), Crowdfunding offerings are typically: StatusA A. IV The SEC can issue subsequent deficiency letters after amendments are reviewed Business entertainment does not fall under the $100 gift limit. While no prospectus is required, each buyer must be given disclosure in an Offering Circular. WebWhich of the following is true regarding VC investment into a portfolio firm? StatusC C. II and III WebAll of the following statements regarding short term negotiable certificates of deposit are correct EXCEPT: A. the minimum denomination is $100,000B. Nov 14 D. Securities Act of 1933. An unregistered hedge fund creates a website and uses it to promote itself to investors. The best answer is B. StatusA A. CFR Title 47. I Federal registration Which of the following are non-exempt issues under the Securities Act of 1933? StatusC C. I, II, III 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 Listed stocks, and stock options are non-exempt issues that must be registered with the SEC. StatusC C. This is permitted under SEC rules as long as the potential viewer completes and signs an arbitration agreement before being given the password to enter Rule 147 is the intrastate exemption; Rule 144 is an exemption from SEC registration for the resale of private placement stock owned by an investor where the company subsequently went public; and Regulation A is an exemption from registration for the sale of a small dollar amount ($50 million or less). StatusA A. I and III StatusC C. under the tax laws, gains on shares that are sold using underwriters are subject to long term capital gains treatment, whereas gains on shares that are sold in the secondary market are subject to short term capital gains treatment Eurodollar bonds are sold outside the U.S. and thus do not fall under the Act. StatusC C. after holding the securities for 2 years The best answer is A. This is retained by the broker-dealer or issuer selling the securities and is proof that the purchasers were accredited. 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