Ch 2 Deck 12

Question 1

Used for U.S. or foreign firms that want to do private placements within the U.S.


Answer 1

Regulation D

Question 2

Regulation D issuers can be either

Answer 2

reporting or non-reporting firms

Question 3

Regulation D includes restrictions on who

Answer 3

can invest in a private placement. The SEC is worried about non- sophisticated investors being sold shares in a private placement and being taken advantage of.

Question 4

Regulation D forbids

Answer 4

general solicitation or advertising —this means newspaper, magazines, TV,
 etc. Again this is to protect the small, unsophisticated investor.


Question 5

Regulation D integration rules

Answer 5

Offers made before 6 months of the start of the Reg D and 6 months after the completion are NOT integrated.

Question 6

Regulation D issuers must file with

Answer 6

the SEC on Form D within 15 days of the first sale.
 they can sell before they file anything in other words.

Question 7

groups that are Accredited Investors

Answer 7

–Large institutional investor

–Corporations, trusts, partnerships with more than $5 million in assets

–Issuer’s directors, executive officers and general partners

–Any firm where all owners are accredited investors (venture capital firms)

Question 8

Individuals that are Accredited Investors

Answer 8


–Individuals with net worth more than $1 million, alone or with a spouse, not including home
–Individuals with income of $200,000 within the last 2 years, or $300,000 with spouse

Question 9

Regulation D rule 504 covers

Answer 9

non reporting issuers for small equity offerings

Question 10

For Regulation D rule 504 Non-reporting issuers for small equity offerings - small means

Answer 10

under $1 million aggregated over 12 months

Question 11

For Regulation D rule 504 Non-reporting issuers for small equity offerings restriction on number or type of investors

Answer 11

none

Question 12

Regulation D, Rule 505 is open to

Answer 12

all issuers (except bad-boys with violations)

Question 13

Regulation D, Rule 505 issue size is

Answer 13

somewhat small under $5 million aggregated over 12 months

Question 14

Regulation D, Rule 506 is open to

Answer 14

all issuers (except bad-boys with violations)

Question 15

Dollar cap on Regulation D Rule 506 offerings

Answer 15

None

Question 16

Limits on Regulation D, Rule 506 investors

Answer 16

Maximum of 35 non-accredited investors (unlimited accredited!), but all must be sophisticated or represented by a “purchaser representative” which is someone who is sophisticated.

Question 17

Prior to putting out Private Placement Documents,

Answer 17

–Placement agent agreement will be signed between investment bank and issuer

Question 18

Most common type of placement agent agreement is

Answer 18

Best-efforts

Question 19

In a private placement potential investors are first given

Answer 19

teaser

Question 20

In a private placement serious investors sign

Answer 20

a confidentiality agreement

Question 21

In a private placement investors receive

Answer 21

Private Placement Memorandum (long detailed document describing private placement)

Question 22

In a private placement shorter document describing terms

Answer 22

Term Sheet

Question 23

Safe harbor exemption from registration for off shore transactions

Answer 23

Regulation S, Exemptions for Off-Shore Transactions

Question 24

Regulation S issuer transactions are open to

Answer 24

both Foreign and U.S. companies.


Question 25

Under Regulation S an offer cannot be made to a person in the United States
–AND one of the following also must be true:

Answer 25

1) Buy order is NOT made in the United States

2) Issuer transaction is made outside the U.S. on a established foreign exchange
3) Resale is made on a designated foreign exchange

Question 26

Regulation S does not allow directed selling efforts

Answer 26

in the US

Question 27

Under Regulation S, cannot sell to US residents even if

Answer 27

They are citizens of another country

Question 28

Regulation D Rule 505 limits on investors

Answer 28

unlimited accredited, maximum of 35 non accredited

Question 29

A shorter alternative to a PPM is a

Answer 29

term sheet

Question 30

Under Regulation S, person in the US includes

Answer 30

US resident
Foreign national Living in US
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