Both the issuer and all purchasers must be state residents B. Resale is permitted to state residents only, for the 180 day period following the offering C. The rule exempts intrastate issues from State registration D. The rule exempts intrastate issues from Federal registration The research report may be sent to any customer if it is accompanied by a preliminary prospectus Correct D. 4. 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"). The maximum amount that can be invested in a single offering under Regulation Crowdfunding is $100,000. 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. StatusB B. a maximum of 4 sales per year are permitted To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. No specific authorization is needed to buy securities for a discretionary customer account where the firm is a market maker in the security - no control relationship exists with the issuer in this case. The offering price is $30 per I purchases of control stock B. The best answer is A. a. 6 months II Variable annuity contracts Any control relationship, wherein a person at the municipal securities firm is in a position to influence a municipal issuer whose securities are being traded by that firm, must be disclosed. Nov 14 Learning Center through glencoe.com The Securities Exchange Act of 1934 regulates intrastate stock offerings made by a company. The most probable reason why these shares are being offered by prospectus is that: The rules: require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal permit a company to raise a maximum aggregate amount of $5 million through crowdfunding offerings in a 12-month period Regulation D permits a private placement to be sold to a maximum of 35 non-accredited investors and an unlimited number of accredited (wealthy and institutional) investors. ARSs are available from both corporate and municipal issuers. The only way to resell them is in a "private transaction. 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. Finally, the broker must represent that it did not solicit the transaction and that it acted as agent in executing the transaction. III The SEC has approved the offering for sale to the public Intrastate offerings Section 3 (a) (11) of the Securities Act is generally known as the intrastate offering exemption. This exemption seeks to facilitate the financing of The best answer is D. Government bonds, municipal bonds, and Small Business Investment Company issues are all exempt securities under the 1933 Act. This offering is a(n): StatusD D. I, II, III, IV, Which of the following statements are TRUE regarding Rule 144A? StatusA A. I and III StatusA A. seller's representation letter StatusA A. I and II only Direct participation programs (limited partnership offerings) are non-exempt securities that must be registered under the Securities Act of 1933 unless an exemption (such as private placement) is obtained. The SEC encourages the use of the internet and permits private placements under Regulation D to be offered via the web. Correct D. I, II, III, IV. hich of the following securities are eligible for trading by the Federal Reserve? The issue here is that there can be an inherent conflict of interest when such a relationship exists. the first date that a new issue can be sold to the public under the provisions of the Securities Act of 1933. 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). 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. III The preliminary prospectus constitutes an offer to sell the issue StatusD D. I, II, III, IV. 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. (b) Describe its shape (skewed left, symmetric, skewed right). The maximum permitted sale amount is: The previous weeks' trading volumes are: 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. D. Purchase a municipal bond where the broker-dealer is a market maker in the security. 1,960,000 shares / 4 weeks = 490,000 share average Regulation A is intended to make it easier for start-up companies to raise capital. StatusB B. II and III only September 27th 18,000 shares Under the advertising rules of the exchanges, any statements made must be truthful, and not exaggerated. A. municipal broker-dealer always makes a market in the municipality's securities that are being recommended The best answer is B. III sales of control stock It simply notifies the SEC that the issue is being offered in compliance with the exemption. Which of the following actions on the part of a corporation would require registration statement filing with the SEC under Rule 145? I Fixed annuity contracts StatusD D. I, II, III, IV. 100% of the issue must be sold solely to state residents to obtain the exemption. StatusA A. II Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person acronym for a "Qualified Institutional Buyer" as defined under Rule 144A. ), The maximum amount that can be raised by an issuer under Regulation Crowdfunding is: ADRs are the way that most foreign corporate issues trade in the United States. III Proceeds from the sale of 500,000 shares will go to the company U.S. Government issues, savings and loan issues, and municipal issues are exempt. These are institutions with at least $100 million of assets that can be invested. Correct A. I and III Thus, issuers have a way of selling securities to these investors quickly without incurring the costs of SEC registration; and the QIB knows that it can always sell that investment to another QIB without needing to register the issue with the SEC. A. United Way can sell the stock without restriction: B. after holding the securities for 3 months. Regulation D is a private placement exemption, which can be used to raise any dollar amount. 525,000 shares II 10% of the outstanding shares StatusC C. II and III Correct A. I and II Rule 144 requires that restricted securities be sold on an agency basis only. 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. Correct B. The best answer is A. Does the Form 144 filing requirement apply to this sale? 1 Which statement is TRUE? 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 the price up). If the Form 144 had been filed the preceding week, the maximum permitted sale is: T "Options involve a lower degree of risk than trading the underlying securities because the capital requirements are lower" D. Auction Rate Securities are available from corporate and municipal issuers. 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. StatusC C. II, III, IV B. I and IV II A Form 144 must be filed if the shares are to be sold IV Up to 6 sales per year are allowed This research report cannot be sent, since it would be considered to be a prohibited "offer to sell" the securities. The last 4 weeks' trading volumes are: trading occurs in the secondary marketD. A registered representative who handles the accounts of wealthy clients is told the 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. Regulation Crowdfunding StatusC C. A security purchased by a non-accredited investor in a Regulation D private placement Common carriers, small business investment companies, and benevolent associations are all exempt. 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. 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 Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. II Intrastate offerings are subject to State registration Please note that a registration statement is not required to be filed if a corporation splits its stock or distributes a stock dividend, since such a distribution affects only the par value of the outstanding shares - it does not create a new class of security. Incorrect Answer C. II and III II Accepting an indication of interest from the customer 3,000,000 shares / 4 weeks = 750,000 share average An investor wishes to sell restricted stock under the provisions of Rule 144. StatusB B. I and IV The best answer is A. Which of the following statements are TRUE regarding Rule 415? I Stock dividend distribution Which statement is TRUE regarding Commercial Paper? 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. 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: Rule 147 exempts "intrastate" issues from registration with the SEC. Correct C. II, III, IV 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). Tier 1 offerings, up to a maximum amount of $20 million, are given the easiest registration method and do not require audited financial statements. III solicitation of orders to buy is restricted to customers expressing interest within the past 10 days D. I, II, III, IV. StatusB B. II and IV only StatusC C. 506,250 shares Under SEC rules, the purchaser of a Regulation D private placement must complete and sign a(n): H0:12;H1:1>2H_0:_1_2; H_1:_1>_2 III the weekly average of the prior 4 weeks' trading volume However, the offerer must set up a password-protected website and can only allow access to accredited investors. StatusC C. II, III, IV StatusA A. the public offering price as stated in the prospectus plus a commission II 5,000 shares Rule 147A is a new intrastate offering exemption adopted by the Commission in October 2016. StatusA A. I and III Tier 2 requires more detailed information, including audited financial statements, and can be used for offerings of up to $50 million. e. What is the pvalue? Rule 144A The effective date occurs once the 20-day cooling off period has elapsed without a deficiency notice being sent by the SEC to the issuer of the securities. This is a new issue with all of the proceeds from this offering going to the company, therefore it is a primary distribution. III primary distribution In April 2017, it was adjusted to $2,200. Correct A. I and III d. What is your decision regarding H0? the SEC rule that spells out the requirements for an issuer to obtain an exemption from registration for a new issue because the offering will be made only in 1 state (an intrastate exemption). $100,000 Week Ending Volume I This is a primary distribution of 500,000 shares The bank that structures the ADRs handles the registration. 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. 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. I 500 shares The issue must also be registered in the state(s) where it will be offered. \text { Tom Brady } & 92.9 & 5.4 & 2.4 \\ StatusA A. 220,000 shares Once the amendment is filed, the 20-day cooling off period starts counting again from the beginning. Correct B. Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following completion of the initial offering. Conduct the following test of hypothesis using the .08 significance level.a. Incorrect Answer C. 12 months I 1% of the outstanding shares 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. StatusC C. I and III only StatusD D. II and IV. I Gift of $75 in cash The filing of Form D is not a registration. There are no purchase limitations on Tier 1 (up to $20 million) Regulation A offerings. An unregistered hedge fund creates a website and uses it to promote itself to investors. B. can recommend a new issue If an E-Mail is sent to 25 or fewer existing or prospective retail customers, it is defined as correspondence. G. Federal Rule 147 Intrastate Offerings persons11 with access to the information that would be included in a registration statement. III primary distribution StatusD D. $5,000,000, The best answer is C. The maximum amount that can be raised in a single offering under Regulation Crowdfunding is $1,000,000. The best answer is B. The research report may be sent to any customer expressing an "indication of interest" The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. B. Which statement is TRUE about insurance coverage on customer brokerage accounts maintained at banks registered solely as municipal securities dealers? 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 The use of the preliminary prospectus constitutes an offer to sell under the Securities Act of 1933 StatusC C. Yes, because she has not held the shares for 6 months Week Ending Volume StatusD D. broker's representation letter. IV Rule 144A permits issuers to sell tradeable private placement units to individual investors To offer a private placement, which statement is TRUE? 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 Correct Answer A. they are sold on a dealer basis Which statement about Auction Rate Securities is FALSE? StatusC C. II and III StatusC C. solicitation of orders to buy is restricted to customers expressing interest within the past 10 days September 13th III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. The Securities Act of 1933 ), Crowdfunding offerings are typically: II State registration E-mails can contain recommendations of securities; but they cannot recommend new issues (unless the e-mail also contained a copy of the prospectus). 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? IV secondary distribution I Resale of the securities is permitted within that state immediately following the initial offering $500,000 The best answer is A. The greater amount is 1% of outstanding shares, or 500,000 shares. StatusC C. Municipal Debt StatusB B. III and IV Correct Answer A. I only "Control stock," which is registered stock of a company bought in the open market by an officer or director of that company, is subject to all Rule 144 requirements when the officer or director wishes to sell, except for the 6-month holding period. \text { Player } & \text { Rating } & \text { TD } \% & \text { Inter } \% \\ 10 The Securities Act of 1933 regulates the subsequent public trading of 200,000 shares IV No disclosure is required to investors StatusD D. II and IV. StatusC C. I, II, III, IV During this time period, the issue may not be sold nor advertised, so neither firm orders, nor deposits can be taken. Sell covered calls September 27th 18,000 shares The best answer is A. The red herring is used to obtain non-binding indications of interest in the issue, and may be sent to anyone during the cooling off period, whether or not that person has previously expressed any interest in the issue. StatusA A. I and II only The deficiency must be cured before the SEC will allow the registration to be effective. Choice "b" is incorrect. October 4th 16,000 shares II Rule 144A limits the amount of restricted securities that can be sold in the public markets 3.The names of columns in all SELECT statements must be identical. with a list of things you could do The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. Intrastate offerings are exempt from Federal IV Federal Home Loan Bank Bonds StatusD D. I, II, III, IV. 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". In addition, the terms of the offering must be filed with FINRA and must comply with FINRA rules. This is prohibited under SEC rules If the Form 144 was filed the preceding week, then the week ending November 12th would not yet have occurred. 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. The weekly average of the preceding 4 weeks' trading volume is: For the exam, know the base amount and the fact that it is indexed for inflation periodically. Oct. 30th All of the following statements about e-mail sent by a registered representative to 50 retail clients are true EXCEPT the communication: 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. 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