Ch 2 Deck 13

Question 1

When can one start selling Regulation S shares on foreign exchanges?

Answer 1

–Immediately


Question 2

When can one start selling Regulation S debt shares to U.S. citizens?

Answer 2

After a 40 day restricted period

Question 3

When can one start selling Regulation S Domestic Equity shares to U.S. citizens?

Answer 3

1 year

Question 4

Investors who buy securities in a private placement cannot go out and immediately sell them in a private placement under

Answer 4

RULE 144 – RE-SALES OF RESTRICTED AND CONTROL SECURITIES

Question 5

securities in a private placement can be resold in a private placement under

Answer 5

Rule 144 exemptions

Question 6

Rule 144 restricted securities are

Answer 6

securities acquired from the issuer in a private placement or other exempt offering.

Question 7

Rule 144 control securities are

Answer 7

securities held by an affiliate of the issuer.

One who is controlled by the issuer, or one who controls the issuer.

Question 8

Rule 144 definition of control

Answer 8

A person “controls” an issuer if the person has power to direct management (a director, executive officer or major shareholder-10% or more stock)

Question 9

Under Rule 144 Non-affiliates selling restricted securities that are reporting companies have a holding period of

Answer 9

6 months

Question 10

Under Rule 144 Non-affiliates selling restricted securities that are non-reporting companies have a holding period of

Answer 10

12 months

Question 11

Under Rule 144 Non-affiliates selling restricted securities must (prior to selling)

Answer 11

remove legend off the securities which can only be done with the permission of the issuer (a transfer agent does this).

Question 12

Under Rule 144 – Control Persons selling non-restricted securities have a holding period of

Answer 12

no holding period, but other requirements hold

Question 13

Under Rule 144 – Control Persons selling non-restricted securities have trading volume limits of no more than

Answer 13

– greater of:
1% of the issuer’s outstanding securities OR
Average weekly trading volume of the securities during the four weeks preceding the sale

Question 14

Under Rule 144 – Control Persons selling non-restricted securities must provide

Answer 14

Adequate current information about the issuer must be available


Question 15

Under 144 Control Persons selling non-restricted securities, the affiliate must file a notice of proposed sale with the SEC on Form 144 if the sale is

Answer 15

more than 5,000 shares or $50,000 dollars

Question 16

Under Rule 144 – Control Persons selling restricted control securities reporting companies have a holding period of

Answer 16

6 months

Question 17

Under Rule 144 – Control Persons selling restricted control securities non-reporting companies have a holding period of

Answer 17

12 months

Question 18

Under Rule 144 – Control Persons selling restricted control securities trading volume limit is no more than

Answer 18

greater of:


• 1% of the issuer’s outstanding securities OR

• Average weekly trading volume of the securities during the four weeks preceding the sale

Question 19

Under Rule 144 – Control Persons selling restricted control securities if the sale is more than 5,000 shares or $50,000 dollars the affiliate must

Answer 19

file a notice of proposed sale with the SEC on Form 144

Good for tracking insiders!

Question 20

Allows issuers and non-issuers to sell restricted securities to QIBs without restrictions.

Answer 20

Rule 144A – Private Re-sales of Securities to QIBs

FOUND ON EXAM A LOT!

Question 21

QIB stands for

Answer 21

Qualified Institutional Buyer

Question 22

Under rule 144A, Once sold, QIBs can sell these restricted securities to

Answer 22

other QIBs

Question 23

QIBs are entities (no individuals) such as

Answer 23

insurance companies, 
investment companies, 
pension plans, 
banks, etc. 
who manage at least $100 million in assets.

Question 24

Creates a private market in restricted securities that otherwise would be illiquid

Answer 24

Rule 144A – Private Re-sales of Securities to QIBs

Question 25

Trading platform for 144A securities is

Answer 25

The Nasdaq operated PORTAL

Question 26

Can Regulation S be used in US Territories?

Answer 26

NO
DC
Puerto Rico
US Virgin Islands

Question 27

Regulation D is open to companies that are

Answer 27

both foreign and domestic

Question 28

Under Rule 144 control persons selling restricted control securities are subject to

Answer 28

both volume limits and holding period restrictions

Question 29

Under Rule 144 control persons selling non-restricted control securities are subject to

Answer 29

only subject to volume limits but not holding period restrictions

Question 30

Rule 144A allows an exemption to the trading restrictions of 144 for

Answer 30

QIB’s

Question 31

Rule 144A allows sale of restricted to securities to

Answer 31

QIB’s

Question 32

Rule 144A allows sales to QIB’s by

Answer 32

both issuers and non-issuers

Question 33

What is allowed to be sold under 144A

Answer 33

Corporate stocks

Corporate bonds

Question 34

What is not allowed to be sold under 144A

Answer 34

Open end funds (mutual funds)
Unit Investment Trusts
Exchange Traded funds

Question 35

Baskets of assets with varying values which are bought and sold on an exchange at a price which reflects the average price of the underlying assets.

Answer 35

Exchange Traded Funds (ETF)

Question 36

An investment company that offers a fixed, unmanaged portfolio, generally of stocks and bonds, as redeemable “units” to investors for a specific period of time. It is designed to provide capital appreciation and/or dividend income.

Answer 36

Unit Investment Trust