StatusB B. I and IV Finally, the broker must represent that it did not solicit the transaction and that it acted as agent in executing the transaction. 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. IV Any purchaser will pay the Public Offering Price plus a commission or mark-up The client cannot make the investment unless he or she is an accredited investor September 27th 280,000 shares 2 weeks' trading volume 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. 200,000 shares Which of the following securities are NOT required to be registered with the SEC? 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"). (see Accredited investor), To claim a private placement exemption: Source: Sports lilustrated 2009 Almanac, .158\rho .158.158. StatusC C. the issuer needs to raise substantial funds from its selling shareholders for some business purpose that is detailed in the prospectus 800,000 shares StatusC C. I, II, III StatusD D. broker's representation letter. StatusD D. I, II, III, IV. StatusC C. I and IV only a. StatusD D. I, II, III, IV, The best answer is B. StatusA A. I and III A corporation files a registration statement with the SEC to issue 300,000 shares out of its authorized stock and to sell 200,000 shares of restricted stock held by officers of the corporation. I A preliminary prospectus may be sent to a prospective customer before the issue has entered into the 20 day cooling off period It is permitted to send a preliminary prospectus (red herring) to obtain indications of interest during the cooling off period, because legally, these are not offers to sell the security. (Test Note: The investment minimum is subject to an inflation adjustment every 5 years. Correct Answer C. II and III The best answer is C. ADRs (American Depositary Receipts) are non-exempt securities and must be registered with the SEC under the Securities Act of 1933. The best answer is B. 2.Reversing the order of the intersected tables alters the result. Which statements are TRUE? New issues can only be offered and recommended via a prospectus (unless the security is exempt). The Federal Government only has jurisdiction over interstate offerings. D)can be used to review the issue's creditworthiness. 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 Correct B. I and IV StatusC C. Yes, because she has not held the shares for 6 months The previous weeks' trading volumes are: Nov 21 Thereafter, they can be resold interstate. StatusA A. III The SEC has approved the offering for sale to the public This is retained by the broker-dealer or issuer selling the securities and is proof that the purchasers were accredited. IV The issuer avoids the 20 day cooling off period and is allowed to issue the securities 2 business days after filing 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. StatusB B. a maximum of 4 sales per year are permitted Second, the Act expands Michigans intrastate offering rule (MUSA 202 (1) (n)) to allow offers and sales to 50 Michigan residents (up from 25 Michigan residents under the old law). The best answer is B. ADRs (American Depositary Receipts) are non-exempt securities and must be registered with the SEC under the Securities Act of 1933. I The spouse is considered to be an affiliated person subject to Rule 144 Correct A. I and III C. II, III, IV 490,000 shares StatusC C. II, III, IV Tier 2 offerings The Act requires non-exempt issues to be registered with the SEC and sold with a prospectus. Oct. 30th StatusB B. I and IV 225,750 shares Which are permitted under FINRA rules? II made by seasoned issuers ", For an institutional investor to qualify as a "QIB" under Rule 144A, the institution must have at least: Correct Answer C. the public offering price as stated in the prospectus without any commission C. Purchase a municipal bond where the broker-dealer has a control relationship with the issuer If the Form 144 was filed the preceding week, then the week ending November 12th would not yet have occurred. Taxes & Tax Shelters: Tax Advantaged Investme, Series 7: Regulations (Other Federal and Stat, Temperature and Pressure Conditions at STP, Regulations: Other Federal and State Regulati, Fundamentals of Financial Management, Concise Edition, Don Herrmann, J. David Spiceland, Wayne Thomas, Transmucosal Drug Delivery I: Bioadhesive Pol. The best answer is B. 220,000 shares Oct 31 Oct. 16th 1,500,000 shares The best answer is B. StatusB B. I and IV Correct A. I and III The 4 weeks' trading to be averaged are: Correct A. (see Regulation D), Which of the following are accredited investors? These are private placement securities that are exempt from registration with the SEC. The rule is split into Tier 1 and Tier 2. The best answer is A. A. I and II only 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 This person can do so, without being subject to the Rule 144 volume limitations, after holding the securities for: WebWhich of the following statements are TRUE regarding restricted securities being sold under Rule 144? 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 capitalization of $75 million. StatusC C. Small Business Investment Company issues III FINRA regulation An abbreviated registration statement is filed with the SEC (Form S1-A) and the issue must go through a 20 day review period, similar to a regular registered offering. The best answer is A. III primary distribution 250,000 shares StatusA A. A security of an issuer which has been bought in the open market by an officer or director of that company B. FINRA Rules Since Commercial Paper is an exempt security under the Securities Act of 1933, it may be sold without a prospectus. A. 485,000 shares StatusC C. after holding the securities for 2 years III Both the issuer and all purchasers must be state residents 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. D. Purchase a municipal bond where the broker-dealer is a market maker in the security. Under Regulation D regarding private placements, how many non-accredited investors are allowed to invest in the offering? StatusA A. seller's representation letter This amount can be sold every 90 days (every 3 months), so a sale can occur 4 times per year. II Any purchaser who received a preliminary prospectus need not receive the final prospectus 1% of 100,000,000 shares = 1,000,000 shares. Under the "penny stock rule," an established customer that is exempt from the rule is defined as a person who has: General creditor status in the liquidation is given to any customer claims that are: B. above Securities Investor Protection Corporation coverage limits. Rule 144A issues are NMS securities that are listed and trade on the NYSE, AMEX and NASDAQ The President of PDQ Corporation donates restricted PDQ shares to the United Way after holding them for 3 years fully paid. 35 Under the Securities Act of 1933, new issues are not marginable until how many days have elapsed from the effective date? A security which was never registered and can only be sold in the public markets when it is either registered, or sold under an exemption provision II Rule 144A limits the amount of restricted securities that can be sold in the public markets A "red herring" preliminary prospectus may be sent to any prospective purchaser of that new issue once the issue has entered into the "20 day cooling off" period that commences upon filing of the registration statement with the SEC. This client cannot make the investment because the dollar amount to be invested is too small These are private placement securities that are exempt from registration with the SEC. StatusD D. The registered representative must forward the e-mail to the branch manager for handling. 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. Correct B. a Form D must be filed with the SEC September 6th Correct Answer A. Search/A-Z Index link and enter the Rule 147 State the decision rule. StatusD D. I, II, III. A registered representative has written discretionary authorization from a customer. 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. The best answer is C. Investment companies, such as mutual funds, are non-exempt; therefore their securities must be registered and sold under a prospectus. 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 Read the code on FindLaw Statements B, C, and D are facts and are true. StatusA A. I and III IV U.S. Government Bond Funds For example, a municipal control relationship might exist if the president of the broker-dealer is also a political official of the town whose bonds are being recommended. IV The preliminary prospectus does not constitute an offer to sell the issue StatusA A. I and II only StatusD D. 90 days. The best answer is C. If the SEC sets the "effective date" for an issue in registration, this means that all proper documents have been filed with the SEC. 280,000 shares Prior to the "20 day cooling off period," the filing had not been made, so nothing can be done that involves contacting the public about that issue. T However, unlike a variable rate demand note (VRDO), they have no embedded put option - meaning that the issuer is not obligated to buy them back at the reset date. StatusD D. Regulation D. The best answer is C. 6 months Rule 144 allows the sale of the greater of 1% of the outstanding shares or the weekly average of the preceding 4 weeks trading volume every 90 days. Non-profit organization with assets in excess of $2,000,000 B. StatusC C. I, II, IV Tier 1 offerings IV at, or prior to, the placement of the order September 6th The rule allows the greater of 1% of the outstanding shares or the weekly trading average of the last 4 weeks to be sold under the filing. I Intrastate offerings are subject to Federal registration 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. During this time period, the issue may not be sold nor advertised, so neither firm orders, nor deposits can be taken. The greater amount is 1% of outstanding shares, or 500,000 shares. Since 144 shares are being sold in the open market, the issuer must comply with SEC issuer reporting rules to maintain the public market in the securities. To sell, a Form 144 must be filed. It is permitted to distribute a red herring preliminary prospectus; to take non-binding indications of interest; and to publish an tombstone announcement. Correct D. II and III only. The bank that structures the ADRs handles the registration. The only way to resell them is in a "private transaction. The issue here is that there can be an inherent conflict of interest when such a relationship exists. StatusD D. any price since this is a negotiated market offering. Intrastate Offerings Defined An intrastate offering can only be purchased in the state it is issued. I for start-up companies 45 days Correct C. I, II, III The best answer is B. The weekly average of the preceding 4 weeks' trading volume is: Which of the following statements are TRUE regarding the preliminary prospectus? September 6th 17,000 shares StatusA A. The best answer is C. Rule 144A allows issuers to sell minimum $500,000 units of private placements to so-called "QIBs" - Qualified Institutional Buyers; and these QIBs can trade the units with other QIBs. III Intrastate offerings are exempt from Federal registration III Merger with another publicly held company D. There is no time limitation on the period that a stabilizing bid can be maintained. II The preliminary prospectus may not be sent to a potential customer prior to that customer expressing an indication of interest As long as the 6-month holding period requirement has been met on the restricted shares (the officer held them 3 years) when they are donated, the charity can sell them immediately. 400,000 shares The best answer is A. If the SEC sets the "effective date" for an issue in registration, this means that all proper documents have been filed with the SEC. StatusA A. a registration statement must be filed with the SEC 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). However, the offerer must set up a password-protected website and can only allow access to accredited investors. 3 months The best answer is B. The intent is to make it easy for start-up company to raise "seed" capital in a private placement offering from a group of relatively small investors. Anyone can purchase a Regulation A offering - it is not limited solely to accredited (wealthy) investors. Which of the following is defined as an "accredited investor" under Regulation D? Posted Date :-2022-03 StatusD D. A security which is purchased by an issuer that is not exempt from the provisions of the Securities Acts. II This is a primary distribution of 300,000 shares StatusD D. each sale is limited to the greater of 1% of the outstanding shares; or the weekly average of the prior 4 weeks' trading volume. StatusA A. I only these securities are issued by banks A The best answer is B. StatusC C. exempt under Rule 144 Under the "access equals delivery" rule, prospectuses can be delivered electronically to customers as long as the member firm knows that the customer has internet access. The best answer is B. 1.It ignores NULL values. short term negotiable CDs are callableC. StatusA A. The best answer is C. To be accredited, an individual must have an annual income of $200,000 per year; or a couple must have an annual income of $300,000 per year; or the purchaser must have a net worth of at least $1,000,000, exclusive of residence. StatusD D. I, II, III, IV. Correct B. $500,000 Incorrect Answer C. $1,000,000 I A registered representative accepts a $300 gift from a customer Since 144 shares are being sold in the open market, the issuer must comply with SEC issuer reporting rules to maintain the public market in the securities. Correct Answer B. The best answer is D. Since this issue is "in registration," it is in the 20-day cooling off period. Once the registration is effective, the final prospectus is used to offer and sell the issue. Rule 144A issues are not listed and trade in the OTCBB or Pink Sheets D. No insurance protection is offered on customer municipal accounts maintained at bank broker-dealers, Which of the following gifts are allowed under FINRA rules? d. What is your decision regarding H0? Which statement is TRUE about insurance coverage on customer brokerage accounts maintained at banks registered solely as municipal securities dealers? 600,000 shares A. I and II only B. III and IV only ", Which of the following activities are allowed once a registration statement for a new issue is filed with the SEC? The best answer is B. The Securities Act of 1933 is primarily concerned with registration of:: The best answer is C. The Securities Act of 1933 requires that new issues that are not exempt from the Act be registered with the SEC. Correct B. American Depositary Receipts "Options are available on stocks, foreign currencies, stock indexes and government debt instruments" 200,000 shares II Stock split Regulation A is an "EZ" registration method for offerings of up to $50 million. for a link to the Occupational Outlook I Fixed annuity contracts The maximum size of single offering under the rule is $1,000,000. 3 months StatusD D. Foreign Government Debt. StatusA A. Excluding the percentage of the outstanding shares test, the maximum permitted sale under Rule 144 is the weekly average of the last: An officer of ABC wishes to sell ABC stock on November 15th under Rule 144. The only way to resell them is in a "private transaction. In addition, the terms of the offering must be filed with FINRA and must comply with FINRA rules. StatusD D. 1,025,000 shares. Incorrect Answer C. II and III Common carriers, small business investment companies, and benevolent associations are all exempt. 400,000 shares Correct Answer D. II and IV. An investor wishes to sell restricted stock under the provisions of Rule 144. StatusB B. Benevolent Association issues September 20th 20,000 shares The best answer is B. C. MSRB Rules StatusA A. Correct C. II and III The registration statement must be filed before the securities can be sold and it must contain full and fair disclosure of the company's business history, financial status, management, and planned use for the proceeds from the sale of the new securities. The Securities Exchange Act of 1934 consists of a variety of rules covering the trading (secondary) market. The tax laws are the same for capital gains treatment of shares that are sold either using underwriters or that are sold on an exchange, making Choice C incorrect. The offering price is $30 per The best answer is B. 1 year Auction Rate Securities are long-term debt issues where the interest rate is reset weekly (or monthly) via Dutch auction. The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. WebXYZ Corporation is preparing a registration statement for a new issue consisting of 300,000 new shares and 200,000 existing shares held by officers. Correct Answer B. I and IV I The rule exempts intrastate issues from Federal registration 500,000 shares All of the following statements can be made to customers about the trading of options EXCEPT: StatusA A. I and III The prior weeks' trading volumes are: Regulation A is intended to make it easier for smaller issuers to raise capital. occupation. One is not accredited because a large purchase of the private placement is made. October 4th 16,000 shares II The proper documents for registration have been filed with the SEC IV The SEC has established the final offering price Restricted stock is stock which was never registered and cannot be sold in the public markets unless registration takes place or an exemption (such as Rule 144) is available. StatusA A. StatusB B. III and IV only II A preliminary prospectus may be sent to a prospective customer once the issue has entered into the 20 day cooling off period StatusD D. An individual investor who buys $2,000,000 of the offering. 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 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 registered representative can follow the customer's instructions by forwarding the request to the member firm's operations department 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. The SEC initially adopted Rule 147 in 1974 to serve as a safe harbor for issuers that conduct intrastate offerings. 18,000 shares ), The maximum amount that can be invested by a client in a single issue under Regulation Crowdfunding is: In addition, the terms of the offering must be filed with FINRA and must comply with FINRA rules. Intrastate offerings are exempt from the Securities Act. Rule 144 permits the sale of the greater of 1% of the shares outstanding or the weekly average of the preceding 4 weeks' trading volume. StatusB B. The 6-month holding period is required for restricted stock, but not for control stock. 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. A: Intrastate offerings are subject to federal registration only B: Intrastate offerings are exempt from state Choice A would not be considered to be a control relationship because the broker-dealer is not involved in a relationship with the issuer - rather the firm is simply trading the bonds in the secondary market. II The rule exempts intrastate issues from State registration Choice "c" is incorrect. IV No disclosure is required to investors The President of PDQ Corporation buys PDQ shares in the open market. the effective date of the issue is unaffected by the deficiency notice An SEC "deficiency letter" indicates that there is not adequate disclosure in the registration documents to allow investor IV Publishing a tombstone announcement III $50,000 StatusB B. The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. MNO has 50,000,000 shares outstanding. 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. What are the problems with intrastate offerings that the SEC is trying to solve? If an officer or selling shareholder wishes to sell a large amount of shares (in excess of Rule 144 limits) of that company, it must register the sale with the SEC, use an underwriter to manage the sale of the shares, and sell with a prospectus. III 10 business days prior of the placement of the order 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. A. municipal broker-dealer always makes a market in the municipality's securities that are being recommended This market is not available to individuals. StatusB B. hypothecation agreement Q2. The issuer must file a Form D with the SEC within 15 days of the offering to claim the exemption. Prospectus does not constitute an offer to sell, a Form 144 be! To offer and sell the issue may not be sold nor advertised, so firm... Issues can only allow access to accredited ( wealthy ) investors the offerer must up... Trying to solve 20,000 shares the best answer is B any purchaser who received a preliminary prospectus does not an., a Form D with the SEC is trying to solve I, II,,... Every 5 years the preliminary prospectus need not receive the final prospectus is used to the. Investment companies, and benevolent associations are all exempt the exemption - it is not required which statements are true regarding intrastate offerings? registered... 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II III... The state it is in a `` private transaction are TRUE regarding the preliminary prospectus ; to take indications. Does not constitute an offer to sell the issue StatusA A. I and IV 225,750 shares Which permitted. Are not marginable until how many non-accredited investors are allowed to invest in the municipality 's that... For a new issue consisting of 300,000 new shares and 200,000 existing shares by! Defined an intrastate offering can only be offered and recommended via a prospectus ( unless the security 144... Adopted rule 147 in 1974 to serve as a safe harbor for that! Interest when such a relationship exists is reset weekly ( or monthly ) via Dutch.! A new issue consisting of 300,000 new shares and 200,000 existing shares held by officers issue may not be nor. 300,000 new shares and 200,000 existing shares held by officers securities dealers be an inherent conflict of ;. I for start-up companies 45 days Correct C. I, II, III, IV website and can only purchased... 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