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Series 79 Chapter 2 > Ch 2 Deck 9 > Flashcards

Ch 2 Deck 9 Flashcards

1
Q

a purchase by a broker-dealer of a customer’s securities, with an agreement that the customer will purchase securities in a fixed-price offering from the broker-dealer

A

“taken in trade”

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2
Q

Rule 2730 is part of a group of rules which prohibits the selling of shares

A

in a fixed price offering at a reduced price

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3
Q

Rule 2730 prevents a FINRA member who is participating in a fixed price offering

A

“from arranging the purchase of shares taken in trade from a customer as payment for securities purchased by the customer in the offering unless the securities taken in trade are purchased at a price no higher than their fair market price.”

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4
Q

Taken in trade transactions must be recorded and the records kept

A

24 months

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5
Q

put into place to try to deter unfair manipulation of the price of stock in an offering—before, during or after a public offering

A

Regulation M

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6
Q

Regulation M is mostly aimed at

A

follow on offerings

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7
Q

Regulation M puts restrictions on those

A 
in a position to unfairly manipulate price
syndicate members
market makers 
issuers
affiliates of the issuers
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8
Q

What Regulation M tier is not easily manipulated

A

Tier 1

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9
Q

What Regulation M tier includes actively traded securities

A

Tier 1

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10
Q

Regulation M Tier 1 Public Float

A

more than $150M

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11
Q

Regulation M Tier 1 ADTV

A

$1M Average Daily Trading Volume

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12
Q

Regulation M Tier 1 restricted period

A

None

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13
Q

medium traded securities are Regulation M tier

A

2

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14
Q

Regulation M Tier 2 ADTV

A

$100,000

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15
Q

Regulation M Tier 2 public float

A

more than $25M

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16
Q

Regulation M Tier 2 restricted period

A

1 day prior to pricing until the person’s participation in the distribution comes to an end

17
Q

Regulation M Tier 3 securities are those which do not meet

A

the requirements for Tier 1 or Tier 2

18
Q

Regulation M Tier 3 restricted period

A

5 days prior to pricing until pricing until the person’s participation in the distribution comes to an end.

19
Q

During the Regulation M restricted period

A

issuers, issuers’ affiliates, and syndicate members who are not market makers, cannot bid for or purchase securities

20
Q

A passive market maker is one who is both

A
  1. an underwriter on a public offering

2. one who bids on shares of the offering in the secondary market


21
Q

passive market making is only allowed on

A

the NASDAQ market

22
Q

If a syndicate member would like to engage in passive market making they need to

A

notify FINRA at least one day prior to the restricted period.

23
Q

A passive market making quote cannot be higher than

A

the highest independent bid.

24
Q

In passive market making an independent bid is

A

a bid made by a market maker not involved in the underwriting

25
Q

Quote restrictions on passive market makers is to prevent

A

passive makers from competing with any other bidders.


26
Q

Regulation M 102 applies to

A

issuers and issuer affiliates

27
Q

Regulation M 101 applies to

A

market makers, syndicate members, selling group members, broker dealers helping with sale of the distribution investment bankers, underwriters

28
Q

Regulation M bars restricted persons from

A

bidding for or purchasing securities during the restricted period

29
Q

Calculate public float by

A

totaling value of common stock not owned by affiliates

30
Q

Pricing usually occurs

A

right before the offering date

31
Q

Regulation M Rule 103 covers

A

passive market making

32
Q

in passive market making, quotes must be identified

A

as a passive market maker bid

33
Q

passive market making can only be done on

A

firm commitment bids

Series 79 Chapter 2 (21 decks)

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