Treasurer of the township, whose bonds the firm is offering on an agency basis, is on the Board of Directors of the municipal firm B. 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. A. StatusB B. This offering is a(n): II Couple earning $300,000 per year Tier 2 offerings allow a maximum of $50 million to be raised, but require audited financial statements. I registered distribution 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 StatusD D. Rule 144A issues cannot be traded in the public markets. Which of the following statements are TRUE about new registered stock offerings? 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. 1% of 100,000,000 shares = 1,000,000 shares. Assuming that all other requirements of the rule are met, the maximum sale amount is: September 27th 200,000 shares Customers in any state can buy - this is not being sold under an "intrastate exemption" (Rule 147) that limits purchasers to residents of 1 state. A registered representative has written discretionary authorization from a customer. 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. C. Municipal principal in a municipal securities firm is the supervisor of the school board whose bonds the firm is trading Which of the following are defined as "accredited investors" under Regulation D? In April 2017, the maximum investment amount was increased to $107,000 and the maximum amount that can be raised was adjusted to $1,070,000. The best answer is D. Prior to the filing of a registration statement for a new issue, nothing can be done. 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. III the weekly average of the prior 4 weeks' trading volume The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. The best answer is B. III Gift of $150 cash Correct Answer A. 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. The SEC initially adopted Rule 147 in 1974 to serve as a safe harbor for issuers that conduct intrastate offerings. The sample mean is 2.59. StatusC C. II and III C. I and III only The deficiency must be cured before the SEC will allow the registration to be effective. The company has 1,800,000 shares outstanding. Conduct the following test of hypothesis using the .08 significance level.a. StatusA A. I and III September 20th 20,000 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. The best answer is C. "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. Under Rule 144, no filing is required if the sale amount every 90 days does not exceed: 400,000 shares Also shown for each quarterback is the percentage of passes that were interceptions, along with the percentage of passes that were touchdowns. StatusB B. I and IV There is no restriction on resales within that state. 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. StatusD D. $1,000,000,000 of assets that it invests on a discretionary basis. The best answer is D. Rule 144 allows the sale of 1% of the issuer's outstanding shares or the weekly average of the preceding 4 weeks' trading volume (whichever is greater). StatusA A. Eurodollar Debt 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. StatusA A. The SEC does not approve of any new issue in registration, does not "certify" the issue, nor do they establish the offering price. StatusD D. no filing is required with the SEC. 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. StatusD D. after holding the securities for an additional 1 year. StatusD D. Regulation D. The best answer is C. The seller must represent that the securities have been held fully paid for 6 months, otherwise Rule 144 cannot be used. As long as the firm has appropriate compliance procedures in place, correspondence is subject to "post-use review and approval." Nov 14 Correct B. a Form D must be filed with the SEC Business entertainment means that the representative and the customer are together at some type of event. StatusD D. I, II, III. 3,000,000 shares / 4 weeks = 750,000 share average StatusB B. after holding the securities for an additional 3 months StatusB B. I and IV The best answer is B. Thereafter, they can be resold interstate. 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. After holding them for 3 months fully paid, the President wishes to sell the shares. If an E-Mail is sent to 25 or fewer existing or prospective retail customers, it is defined as correspondence. (Regulation D -the private placement exemption - sets the requirements for "accredited" investors - these are wealthy individuals.) StatusC C. A security purchased by a non-accredited investor in a Regulation D private placement II Resale of the securities is permitted outside that state immediately following the initial offering Correct Answer D. 6 months. The maximum amount that can be invested in a single offering under Regulation Crowdfunding is $100,000. IV No disclosure is required to investors The best answer is B. StatusC C. II and III This amount can be sold how many times a year? StatusA A. I only E-mails can contain recommendations of securities; but they cannot recommend new issues (unless the e-mail also contained a copy of the prospectus). WebWhich of the following is true regarding VC investment into a portfolio firm? September 13th It is permitted to distribute a red herring preliminary prospectus; to take non-binding indications of interest; and to publish an tombstone announcement. Which of the following is an exempt security under the Securities Act of 1933? 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. Correct Answer A. The best answer is B. Which of the following securities is NOT exempt from the Securities Act of 1933? Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following first sale. 18,000 shares II Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person Incorrect Answer A. StatusC C. II and III StatusD D. II and IV. 750,000 shares A Qualified Institutional Buyer must be an institutional investor (not an individual) with at least $100 million of discretionary funds available for investment. Note that there is no similar limitation on Tier 1 purchases. trading occurs in the secondary marketD. IV Soliciting orders to buy the issue A new issue offering to a maximum of 35 non-accredited investors that has not been registered with the SEC is: Correct A. Thereafter, they can be resold interstate. 6 months Correct A. I and III September 6th 17,000 shares 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. There are 2 "tiers" to the rule. Correct A. IV $500,000 Legally, these are not considered to be offers of the security. StatusC C. 9 months StatusB B. III and IV only Correct C. $100,000,000 of assets that it invests on a discretionary basis 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 security of an issuer which has been bought in the open market by an officer or director of that company "Options are available on stocks, foreign currencies, stock indexes and government debt instruments" Correct A. 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. Why do you think JCB chose to enter India via a joint venture, as opposed to some other entry mode? WebWhich statements are TRUE regarding intrastate offerings? 200,000 shares 3 months Once the registration statement is filed, the issue enters the 20-day cooling off period. The Securities Exchange Act of 1934 regulates intrastate stock offerings made by a company. However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. Correct C. Regulation A stock, usually issued directly to the officers or directors of a corporation in a private placement, that has not been registered with the SEC. The only way to resell them is in a "private transaction. StatusA A. I and III only Week Ending Volume The interest rate on an Auction Rate Security is reset weekly or monthly It could do this by making purchases of that issue in its discretionary accounts. a private placement investor under Regulation D who is not wealthy enough to be "accredited." 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. StatusC C. 60 days B. StatusC C. 18 months (Test Note: The maximum amount that can be raised is subject to an inflation adjustment every 5 years. StatusC C. 50 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 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 best answer is A. I for start-up companies The VC funding will be given preferred stock with warrants, or convertible debt that the company has to Tier 2 requires more detailed information, including audited financial statements, and can be used for offerings of up to $50 million. Correct Answer B. Industrial Company issues 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. All of the following statements are true about the Securities Act of 1933 the 525,000 shares StatusD D. I, II, III, IV, The best answer is B. WebWhich of the following statements are TRUE regarding restricted securities being sold under Rule 144? Correct A. immediately Regulation D is a private placement exemption, which can be used to raise any dollar amount. StatusD D. there are no minimum income or net worth standards for individuals wishing to invest. IV Federal Home Loan Bank Bonds Auction Rate Securities are long-term instruments 17,000 shares 500,000 shares StatusC C. a Form 144 must be filed with the SEC The most probable reason why these shares are being offered by prospectus is that: CFR Title 47. Thus, a corporation distributing a stock dividend or splitting its stock would not require a registration statement filing. C. Purchase a municipal bond where the broker-dealer has a control relationship with the issuer IV with a less-rigorous registration process with the SEC There are no purchase limitations on Tier 1 (up to $20 million) Regulation A offerings. before the Act was written; and Congress did not want to subject them to "double" regulation. Retail communications must be approved in advance by a principal. StatusD D. either before, during, or after the 20 day cooling off period. Correct Answer C. II and III III Any purchaser will pay the Public Offering Price September 27th 18,000 shares Which of the following statements are TRUE regarding the preliminary prospectus? 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} 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. StatusA A. I and III The Official Statement is the disclosure document for municipal bonds (which are an exempt issue). 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. I The preliminary prospectus may be sent to a potential customer prior to that customer expressing an indication of interest 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. 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. StatusD D. 24 months, The best answer is B. StatusC C. 8 weeks' trading volume Nov. 5th III Accepting a deposit from the customer StatusB B. hypothecation agreement Correct B. III and IV only The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. Rule 144A issues are NMS securities that are listed and trade on the NYSE, AMEX and NASDAQ II Advertisement of the issue Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. The only permitted written communications during this period are the red herring preliminary prospectus, and a tombstone announcement (which, in reality, is not published until the effective date). The issue can be sold to an unlimited number of "accredited" (wealthy and institutional) investors under this exemption and still be considered a private placement. IV Rule 144A permits issuers to sell tradeable private placement units to individual investors There is no minimum purchase amount that makes an individual accredited. Correct D. II and IV. These are institutions with at least $100 million of assets that can be invested. This amount can be sold every 90 days (every 3 months), so a sale can occur 4 times per year. The best answer is D. Since this issue is "in registration," it is in the 20-day cooling off period. B. III and IV only III Merger with another publicly held company ABC corporation has 100,000,000 shares outstanding. StatusD D. II and IV. StatusA A. I and IV only I Any purchaser who received a preliminary prospectus must also receive the final prospectus III The use of the preliminary prospectus constitutes an offer to sell under the Securities Act of 1933 III Intrastate offerings are exempt from Federal registration B)is also called a prospectus. I Rule 144A allows qualified institutional buyers to buy and trade between themselves large blocks of privately placed issues IV Intrastate offerings are exempt from State registration StatusB B. II and III only StatusA A. I and II only StatusA A. I and 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 A: Intrastate offerings are subject to federal registration only B: Intrastate offerings are exempt from state StatusA A. Correct Answer D. The client can make the investment without restriction, The best answer is D. Crowdfunding offerings are targeted at small investors. Correct B. They are targeted at small investors. Thus, the registration for the issue may never "go effective. Intrastate offerings are subject to: 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). The best answer is A. 220,000 shares StatusA A. Which of the following is defined as an "accredited investor" under Regulation D? StatusA A. 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. The Form 144 is filed on Monday, October 5th. The greater amount, 18,250 shares, can be sold during the next 90 days. I registered distribution acronym for a "Qualified Institutional Buyer" as defined under Rule 144A. 225,750 shares An investor wishes to sell restricted stock under the provisions of Rule 144. Statement A is untrue - options have greater risk than the underlying securities because they are more volatile and lose time value each day. Incorrect Answer B. 2 years StatusB B. I and IV I 500 shares It gives an "E-Z" registration method for offerings of up to $50 million within a 12 month period. (see Non-exempt security, Prospectus). Nov 7 Essentially Intrastate crowdfunding simply means, crowdfunding that occurs entirely within a single state can be governed by the rules of that state (i.e. 4 weeks' trading volume 1 The Securities Act of 1933 II Gift of baseball tickets with a value of $75 The sample mean is 2.67. Oct. 30th are not allowed. 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On Tier 1 purchases thus, a corporation distributing a stock dividend or splitting its stock would require! Facilitate the financing of local business operations next 90 days ( every 3 months ), so a can. The Act was written ; and Congress did not want to subject them to `` double '' Regulation shares. Following securities is not wealthy enough to be `` accredited. greater amount, 18,250 shares, be... Retail customers, it is defined as correspondence existing or prospective retail customers, it is as. Of Rule 144 months following first sale 6 months following first sale offerings are targeted at small investors Act 1934! As defined under Rule 144A statement a is untrue - options have greater risk than underlying... Statement filing ; and Congress did not want to subject them to `` double '' Regulation 90! Monday, October 5th publicly held company ABC corporation has 100,000,000 shares outstanding `` in,. 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