Chapter 8

Question 1

Type of registration includes:
1) prompt filing with the administrator of any amendments filed with the SEC.
2) a description of the proposed use of the proceeds of the underwriting.
3) The statement of the maximum and minimum proposed offering prices and the maximum underwriting compensation must be filed at least two full business days before the effective date

Answer 1

Coordination

Question 2

Material facts are facts that an investor relies on to make investment decisions. The willful omission of a material fact in the sale, purchase, or offer of a security is _____________________.

Answer 2

FRAUDULENT- no matter what kind of security

Question 3

Howey Case

Answer 3

The U.S. Supreme Court case resulting in the decision that an investment contract is a security

Question 4

Under the Uniform Securities Act, a private placement is considered an exempt transaction if

Answer 4

the number of noninstitutional offers is limited to a maximum of 10 in any 12-month period.

Question 5

The prospectus is a legal document and _______________.

Answer 5

May Not Be Altered– It is illegal for an advisory to highlight/circle, point out or edit any information in a prospectus.

Question 6

Accredited Investor Yes or No:

A registered open-end investment company with net assets of $600,000

Answer 6

YES

Question 7

Accredited Investor Yes or No:

An individual with a net worth, including the value of her primary residence, that is greater than $1 million

Answer 7

NO

Net worth must exclude the value of residence

Question 8

Accredited Investor Yes or No:

An individual whose income was greater than $200,000 in each of the two most recent years with a reasonable expectation of reaching that level again this year

Answer 8

YES

Question 9

Accredited Investor Yes or No:

Any organization not formed for the purpose of purchasing securities with a net worth in excess of $5 million

Answer 9

Yes

Question 10

__________ can issue Stock.

Answer 10

Corporations

Question 11

Federal and state governments, including municipalities, can issue __________securities but not __________ securities

Answer 11

Federal and state governments, including municipalities, can issue debt securities but not equity securities

Question 12

The antifraud provisions of the Uniform Securities Act apply whenever an offer or sale is made of a _______________.

Answer 12

Security

Question 13

Exempt or not Exempt under the USA:

Common stock issued by life insurance companies authorized to conduct insurance sales in that state

Answer 13

EXEMPT

Question 14

Exempt or not Exempt under the USA:

Railroads under the jurisdiction of other state or federal regulators

Answer 14

EXEMPT

Question 15

Exempt or not Exempt under the USA:

Equipment trust certificates issued by railroads whose rates are not subject to regulation by a state or federal agency

Answer 15

NOT EXEMPT – if the railroad is not regulated by under the jurisdiction of other state or federal regulators (the case here), the exemption does not apply.

Question 16

Exempt or not Exempt under the USA:

Commercial paper with no more than nine months to maturity that is in one of the three highest ratings by a nationally recognized rating agency and in a minimum denomination of $10,000

Answer 16

NOT EXEMPT - The commercial paper would qualify if the denomination was $50,000 instead of $10,000

Question 17

Exempt or not Exempt under the USA:

Bonds that are obligations of the People’s Republic of North Korea

Answer 17

NOT EXEMPT - The exemption for foreign government securities applies only to those countries with which the United States maintains diplomatic relations. At the time of this writing, North Korea is on a very short list of countries that do not qualify.

Question 18

What must be specified in the state registration statement of the security

Answer 18

1) all other states where the security is currently registered or will be registered
2) the total amount of the security that will be offered in this state.
3) a stop order from any other state that affects the offering of the security within that state.

Question 19

Any security equal or senior to one listed on the NYSE is a ________________ _____________ security.

Answer 19

Federally Covered

Question 20

Municipal bonds are a ______ covered security except in their state of issuance.

Answer 20

Federally

Question 21

_____ the _____ securities are not considered federal covered.

Answer 21

Over the counter securities (OTC) are not considered federal covered.

Question 22

Following the publication of a tombstone advertisement relating to an issue undergoing registration with SEC, an agent of a broker-dealer receives a call from a client who expresses the desire to purchase 100 shares at the best available price. The agent is permitted to

Answer 22

ONLY send a preliminary Prospectus

Question 23

During the __________ period of an initial public offering, an agent may respond to an inquiry by providing the customer with a preliminary prospectus. No other advertising or research may be sent.

Answer 23

Cooling-Off

Question 24

In any case where there is a question as to the legality of a specific exemption, the burden of proof is always on the party _______________________

Answer 24

requesting the exemption

Question 25

An _________________is one in which the issuer receives the proceeds of the sale

Answer 25

Issuer Transaction

Question 26

Insurance products are excluded from the definition of a security unless the word ______ is part of the description

Answer 26

variable

Question 27

Exempt or Not Exempt under USA: Negotiable certificates of deposit with $100,000 denominations

Answer 27

EXEMPT A negotiable certificate of deposit issued by a bank is an exempt security

Question 28

Exempt or Not Exempt Under USA: Shares of a U.S.-based insurance company not authorized to sell policies in that particular state

Answer 28

NOT EXEMPT Insurance company shares are nonexempt if the issuer is not authorized to do business in that particular state

Question 29

Exempt or Not Exempt under USA: Common stock traded on the London Stock Exchange

Answer 29

NOT EXEMPT Although debt securities issued by the United Kingdom are exempt, corporate securities issued by British companies are not.

Question 30

Exempt or Not Exempt under USA: Commercial paper maturing in 12 months

Answer 30

NOT EXEMPT Commercial paper loses its exemption if the maturity is longer than 270 days.

Question 31

Credit Unions, Corporations, and Partnerships are all considered Persons allowed to _______ Securities.

Answer 31

ISSUE

Question 32

True or False: and Individual Natural person is allowed to issue securities

Answer 32

FALSE- you cannot sell stock in yourself, idiot

Question 34

_______, exempt securities under the Securities Act of 1933, are also federal covered securities with one significant exception: if the issuer is a political entity in this state and it is sold to a resident of this state, it is not considered a federal covered security in this state.

Answer 34

Municipal bonds

Question 35

State registration by_______ is available only if a federal registration statement has been filed under the Securities Act of 1933 in connection with the same offering.

Answer 35

coordination

Question 36

Any _____ bond is considered an exempt security under the Uniform Securities Act.

Answer 36

municipal

Question 37

For a private placement to remain an exempt transaction under the Uniform Securities Act, the offer may be directed to no more than____ individuals during any 12-month period.

Answer 37

10

Question 38

True or false : The issuer of a federal covered security may be required to pay fees to the states.

Answer 38

True

Question 39

True or false: security issued by an investment company registered under the Investment Company Act of 1940 is a federal covered security

Answer 39

True

Question 40

Regulation____ controls private placements

Answer 40

D

Question 41

Under the USA, the Administrator can revoke any transaction exemption, except those involving ____ _____ securities.

Answer 41

Federally covered

Question 42

When it comes to revoking a security's exemption, the only two where the Administrator has the power to do so are those issued by _____ organizations and in connection with an _____ _____plan.

Answer 42

nonprofit organizations and in connection with an employee benefit plan.

Question 43

Under the___, federal covered securities include all investment companies registered under the Investment Company Act of 1940, regardless of where they trade

Answer 43

NSMIA

Question 44

True or false: Canadian government and municipal securities are not federal covered (although, under the Uniform Securities Act, they are exempt securities).

Answer 44

True

Question 45

Before issuing a security in a state, the issuer must either register the security in the state or be exempt from registration under the ____ _____Act.

Answer 45

Uniform securities act

Question 46

True or false- After the SPAC has its IPO, the SPAC then merges with a private company, making it a publicly traded security

Answer 46

True

Question 47

Corporate debt securities (such as commercial paper) are exempt from registration under the Securities Act of 1933 if their maturities do not exceed how many days?

Answer 47

270

Question 48

True or false

Answer 48

A transaction with a corporation that is not a financial institution is neither an exempt transaction nor exempt from the registration rules.

Question 49

There are three requirements for a preorganization subscription to qualify as an exempt transaction, and those three are

Answer 49

1-no more than 10 subscribers. 2-No payment may be made by any subscriber. 3- No commission may be paid to anyone for soliciting potential subscribers.

Question 50

Securities are registered at the federal level under the Securities Act of ______.

Answer 50

1933

Question 51

_________ __________may qualify as an exempt security if the minimum denomination is $50,000, has a maturity of not more than 270 days, and is rated in one of the three highest rating categories by a nationally recognized rating agency.

Answer 51

Commercial paper

Question 52

When an issuer's stock is listed on the NYSE, any security it issues that is equal to or senior to that stock is a federal covered security and ________from ______ with any state

Answer 52

exempt from registration

Question 53

The state securities ___________ has jurisdiction over investment advisers, broker-dealers, and anyone who is associated with those entities.

Answer 53

Administrator

Question 54

True or False:In almost every instance, an issuer transaction—that is, one for the benefit of the issuer—will not be considered an exempt transaction.

Answer 54

TRUE

Question 55

Under both the Securities Act of 1933 and the Uniform Securities Act, a ________must be given to any purchaser of a new issue of common stock. Under federal law, the time limit is no later than completion of the trade. Under state law, the________ has to be delivered prior to the sale, not the offer.

Answer 55

prospectus

Question 56

the Administrator is not empowered to deny an exemption from state registration to which of these? 1 U.S. government securities 2 Private placement transactions 3 A transaction with an insurance company 4 Municipal bonds issued by another state

Answer 56

1&4

Question 57

Offers of___________ certificates are not exempt when compensation is paid.

Answer 57

preorganization

Question 59

Securities sold under Regulation___ of the Securities Act of 1933 are private placements and, under the NSMIA, are considered federal covered securities.

Answer 59

D