FC Chapter 1 Flashcards
(226 cards)
1
Q
True or False: ADRs are priced in, and pay dividends in, the currency of the issuing foreign company.
A
False. ADRs are priced in, and pay dividends in, U.S. dollars.
2
Q
True or False: Under Reg. S, investors may resell non-convertible debt in the U.S. even if held for less than one year.
A
True. Non convertible debt has a 40-day holding period.
3
Q
As it relates to a Regulation A offering, explain how an issuer tests the waters.
A
Using general solicitations and advertising before filing an offering statement with the SEC to gauge investor interest
4
Q
What information may be found in an issuer’s private placement offering memorandum?
A
The use of the proceeds, specific suitability standards, and the issuer’s financial statements
5
Q
True or False: Rather than judging an investment’s merit, the SEC reviews completeness of registration documentation.
A
True
6
Q
Related to the registration process, when does the cooling-off period begin?
A
Once the registration statement is filed with, and filing fee is paid to, the SEC
7
Q
What is the main purpose of the final due diligence meeting?
A
To ensure that prospectus information is complete and accurate
8
Q
For an individual to be considered accredited, she must have income of $_______ in each of the last two years.
A
For an individual to be considered accredited, she must have income of $200,000 in each of the last two years.
9
Q
What is an ownership characteristic of a REIT?
A
Limited liability
10
Q
An offering’s effective date is generally the _____ day after the filing of the last amendment.
A
An offering’s effective date is generally the 20th day after the filing of the last amendment.
11
Q
True or False: A purchaser rep may not be an officer, director, or greater than 10% owner of the issuer.
A
True. Unless they’re related to the nonaccredited investor.
12
Q
For how long must a prospectus be provided in the after-market for a non-exchange follow-on offering?
A
40 days
13
Q
True or False: A REIT is considered an investment company.
A
False
14
Q
If a completed registration must be amended, when will it become effective?
A
Upon SEC declaration
15
Q
95% of a REIT’s gross income may be based on various activities, and ____% must be solely from real estate.
A
95% of a REIT’s gross income may be based on various activities, and 75% must be solely from real estate.
16
Q
Explain the details of Regulation D, Rule 504 offerings.
A
$5 million limit; no disclosure requirement; unlimited number of purchasers
17
Q
What amount of capital may be raised by an issuer under Regulation D, Rule 506?
A
An unlimited amount
18
Q
For dealers, other than managers or co-managers, the quiet period is _____ calendar days.
A
For dealers, other than managers or co-managers, the quiet period is 10 calendar days.
19
Q
For a WKSI, a shelf registration becomes effective ______________.
A
For a WKSI, a shelf registration becomes effective immediately.
20
Q
List some items that are required to be included in an issuer’s registration statement.
A
Nature of its business, total capitalization (equity and debt), financial statements, biographies of officers/directors
21
Q
True or False: For a new issue, indications of interest are NOT shared with management.
A
False. Indications of interest are shared to assist in determining the offering price.
22
Q
What are the requirements to qualify for a Tier 2 exemption under Regulation A+?
A
A maximum offering of $50 million over 12 months, with no more than $15 million being offered by selling shareholders
23
Q
Joan left a message on a BD’s voicemail requesting information about opening an account. May she be called at 9:01 p.m.?
A
Yes. Call time restrictions do not apply since Joan has made an unsolicited inquiry of the firm.
24
Q
True or False: Covenants exist to restrict the change of a company’s control and to require insurance on certain assets.
A
True
25
True or False: Rule 504 Private Placements require purchaser representatives.
False. Purchaser representatives are required under Rule 506.
26
To be considered a WKSI, an issuer must be eligible for automatic shelf registration using what registration form?
Form S-3 (short form registration statement) or F-3 (for foreign private issuers)
27
Under the TCPA, on what days do the call time restrictions apply?
The call time restrictions apply on every day of the year.
28
According to Reg. S-X, who must prepare an attestation report?
A certified public accountant (CPA)
29
What does the Trust Indenture Act of 1939 regulate?
The issuance of corporate bonds
30
The maximum number of non-accredited investors in a Reg. D offering is _____.
The maximum number of non-accredited investors in a Reg. D offering is 35.
31
After the initial offering of a REIT, where will subsequent trading occur?
Either on an exchange or OTC
32
True or False: A covenant may not be included in a bond indenture to require a certain debt service coverage ratio.
False
33
True or False: Blue-Sky Laws apply to broker-dealers and agents operating within a state.
True
34
In the after-market, a prospectus must be provided for ____ days following a non-exchange follow-on offering.
In the after-market, a prospectus must be provided for 40 days following a non-exchange follow-on offering.
35
In the after-market, a prospectus must be provided for ____ days following a non-exchange IPO.
In the after-market, a prospectus must be provided for 90 days following a non-exchange IPO.
36
The trading of REITs is most similar to what type of investment company?
Closed-end management companies, since both trade in the secondary market (exchange or OTC)
37
Regulation A requires an issuer to file ____ years of financial statements that may be __________.
Regulation A requires an issuer to file two years of financial statements that may be unaudited.
38
What investment benefit do REITs provide to investors?
Stable dividend payments
39
When does a BD have no restrictions on publishing research reports about a new issue?
When the BD is not acting as an underwriter of the offering
40
An offering of shares with the proceeds being directed to the issuing corporation is called a ________ offering.
An offering of shares with the proceeds being directed to the issuing corporation is called a primary offering.
41
QIBs are financial institutions that have at least $_________________ invested in securities of non-affiliated issuers.
QIBs are financial institutions that have at least $100 million invested in securities of non-affiliated issuers.
42
If ABC's common stock is in registration, an underwriter of the deal may comment on the issuer's __________________.
If ABC's common stock is in registration, an underwriter of the deal may comment on the issuer's non convertibles.
43
When is a BD, who is acting as an underwriter for a WKSI's common stock, allowed to publish research about the stock?
When continuing its regular coverage of the issuer (It may not be initiating coverage.)
44
U.S. companies may issue securities abroad and claim an exemption from registration under what provision?
Regulation S
45
Generally, what happens to the stock's price once the issuer announces a PIPE offering?
It declines since there will be an increase in the number of shares (potential dilution).
46
Where may sponsored ADRs trade?
On U.S. exchanges (Nasdaq or the NYSE)
47
True or False: Registration provisions apply when securities are offered through a private placement.
False. Private placements are exempt from registration.
48
Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a _____.
Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a QIB.
49
Volume and holding period restrictions do not apply to the resale of private placements if the __________ is a QIB.
Volume and holding period restrictions do not apply to the resale of private placements if the purchaser is a QIB.
50
True or False: Covenants in a bond indenture may set the maximum debt-to-equity ratio to be maintained.
True
51
True or False: Regulation S-K requires the use of outside review.
False. Outside review is permitted, but NOT required.
52
What items must be included in a preliminary prospectus?
The number of shares or amount of bonds to be issued, as well as the use of the proceeds
53
What recommendation is made through a legend placed on a free writing prospectus?
That investors should read the statutory prospectus
54
One requirement for a WKSI is having a public float of equities totaling $____ million.
A WKSI must have a public float of equities totaling $700 million.
55
True or False: For a seasoned issuer, a shelf registration becomes effective immediately.
False. A seasoned issuer may use a shelf registration, but it will be subject to SEC staff review.
56
True or False: Regulation S limits the amount of capital that may be raised through overseas offerings.
False. There is no capital limit; however, all investors must be non-U.S. residents.
57
What is a statutory prospectus?
Any communication, whether written or broadcast, that offers a security for sale
58
True or False: The SEC recommends the delivery of an offering memorandum to all private placement purchasers.
True. However, delivery of the memorandum is required for nonaccredited investors only.
59
What type of information may be omitted when an issuer files a shelf registration?
Offering price, amount selling, selling shareholders' names, offering type (primary or secondary), security description
60
True or False: The initial offering of a REIT is exempt from the Securities Act of 1933.
False. Registration is required under the Act.
61
True or False: During the pre-filing period, certain issuers may be prohibited from communicating with the public.
True
62
True or False: Prior to a PIPE offering, an RR may sell the stock short or buy put options on the stock.
False. These activities would violate insider trading rules.
63
Regulation D offerings under Rule 504 may not exceed $___ million.
Regulation D offerings under Rule 504 may not exceed $5 million.
64
What investment facilitates the trading of foreign securities in U.S. markets?
American Depositary Receipts (ADRs)
65
Does the owner of an ADR receive voting rights?
Yes
66
List some characteristics of American Depositary Receipts (ADRs).
Priced in U.S. dollars, pay dividends in U.S. dollars, carry voting rights, are sponsored or unsponsored
67
What provision in securities law restricts certain types of communication during the offering?
Gun Jumping
68
May a preliminary prospectus (red herring) be sent during the cooling-off period?
Yes. The red herring is used to obtain indications of interest from potential purchasers.
69
Explain the details of Regulation D, Rule 506 offerings.
No dollar limit, disclosure required, unlimited accredited investors, with 35 nonaccredited limit (need purchaser rep)
70
In a Regulation A offering, what disclosure document is provided to investors?
An offering circular
71
Which regulation requires that a registrant maintain effective internal controls regarding its financial reporting?
Regulation S-X
72
What amount of time must elapse before equity securities issued under Regulation S may be resold into the U.S.?
One year
73
What is the name of the offering of additional shares after a company has conducted its initial public offering (IPO)?
A follow-on offering or additional issuance
74
What is the maximum amount of proceeds selling shareholders may receive through a Regulation A offering?
$1,500,000
75
Name some Self-Regulatory Organizations (SROs).
FINRA, MSRB, CBOE, and other exchanges
76
When may Regulation S securities be resold through a designated offshore securities market?
Immediately
77
A Purchaser Representative for a non-accredited investor may be an officer of the issuer if ________________________.
A Purchaser Representative for a non-accredited investor may be an officer of the issuer if related to the purchaser.
78
True or False: For a Rule 147 exemption, the issuer's home must be in the state in which the securities will be sold.
True
79
What is the after-market prospectus requirement for the follow-on offering of an exchange-listed stock?
No requirement exists for the follow-on offering of an exchange-listed stock.
80
Under the TCPA, if requested, a client must be placed on the Do Not Call List within ____ days of request.
Under the TCPA, if requested, a client must be placed on the Do Not Call List within 30 days of request.
81
Where do ADRs trade?
On an exchange or through the Pink Sheets or OTCBB
82
For how long may a new issue be sold under a shelf registration?
Up to 3 years
83
True or False: A free writing prospectus may be published only after a registration statement has been filed.
False
84
What information is NOT included in an issuer's registration statement?
Earnings projections, comparison of profitability to its competitors, or results of its due diligence meeting
85
What does Regulation S provide to U.S. companies?
An exemption from registration if its securities are issued outside the U.S.
86
Describe a cross default clause.
A statement that default may occur on one loan due to an issuer defaulting on another loan.
87
Once the final offering price is set, the issuer files a _________________ with the SEC.
Once the final offering price is set, the issuer files a final prospectus with the SEC.
88
True or False: A WKSI is offered a streamlined registration process and more freedom when communicating with investors.
True
89
List some items that may be omitted from a preliminary prospectus.
Final offering price, underwriting and dealer discounts, and proceeds to be received by the issuer
90
A statutory preliminary prospectus is also referred to as a _____________.
A statutory preliminary prospectus is also referred to as a red herring.
91
In what does a real estate investment trust (REIT) invest?
A diversified portfolio of properties and/or mortgages
92
Is a BD allowed to initiate coverage of a reporting company and begin to act as its underwriter simultaneously?
No. A BD may only continue its regular coverage of a reporting company (not initiate).
93
True or False: Generally, shareholders bear the burden of paying tax on income generated by a REIT.
True. Most REITs distribute a significant amount of their income to shareholders.
94
According to the Trust Indenture Act of 1939, a trustee is appointed to represent the _____________ best interests.
According to the Trust Indenture Act of 1939, a trustee is appointed to represent the bondholder's best interests.
95
According to Reg. S-K, documents filed more than _____ years ago may not be incorporated.
According to Reg. S-K, documents filed more than five years ago may not be incorporated.
96
Explain the importance of Regulation S-K.
It sets rules for: 1) the format used to present projections and 2) the non financial components of a firm's filings.
97
QIB stands for ___________________________.
QIB stands for Qualified Institutional Buyer (QIB).
98
True or False: In a Regulation A offering, securities may NOT be offered publicly.
False. Public offerings are permitted.
99
True or False: An FWP constitutes an offer to sell, or solicitation to buy, a registered offering.
True
100
Explain the details of Regulation D, Rule 504 offerings.
$5 million limit; disclosure required; unlimited accredited, with limit of 35 nonaccredited (no rule on sophistication)
101
True or False: A well-known seasoned issuer (WKSI) may NOT be an ineligible issuer.
True
102
True or False: A BD may publish research reports about a stock when not acting as the issuer's underwriter.
True
103
For a new issue, are indications of interest binding or non-binding?
They are non-binding.
104
True or False: Only individuals may purchase securities issued under a Rule 147 exemption.
False. Potential purchasers include individuals, corporations, partnerships, and trusts.
105
True or False: Rule 144A securities may be offered by both domestic and foreign issuers.
True
106
What form is filed to register securities issued in transactions subject to Rule 145 provisions?
Form S-4
107
Instead of an equities test, a WKSI may have $___ billion in aggregate debt issuances in the previous three years.
Instead of an equities test, a WKSI may have $1 billion in aggregate debt issuances in the previous three years.
108
To be considered a WKSI, the issuer must have been a reporting company for the previous ____ months.
To be considered a WKSI, the issuer must have been a reporting company for the previous 12 months.
109
According to Rule 145, what are some examples of reclassifications that trigger registration requirements?
Substitutions of one security for another, mergers involving an exchange, spinoffs, or transfers of corporate assets
110
True or False: A shelf registration filing must include identification of the type or class of securities being sold.
True. However, a detailed description of the securities may be omitted.
111
Under Rule 147, what percentage of issuer assets must be located, revenues generated, and proceeds used in the state?
80%
112
According to the Trust Indenture Act of 1939, for what reasons may default occur?
The issuer misses interest or principal payments, or fails to comply with a covenant
113
Accredited investors have net worth of at least $_________ or pre-tax income in each of the last two years of $________.
Accredited investors have net worth of at least $1,000,000 or pre-tax income in each of the last two years of $200,000.
114
Under the TCPA, an existing relationship exists if a client has engaged in transactions with a firm within ___ months.
Under the TCPA, an existing relationship exists if a client has engaged in transactions with a firm within 18 months.
115
Is a high net worth individual who meets the accredited investor definition under Regulation D considered a QIB?
No. A QIB is an institution, not an individual.
116
What document may a Well-Known Seasoned Issuer (WKSI) use to communicate with potential investors?
Free writing prospectus
117
For how long must a prospectus be provided in the after-market for the IPO of a stock to be listed on an exchange?
25 days
118
What conditions must be met to qualify for an exemption under Regulation S?
The offer may NOT be directed to a U.S. resident and the trade must be effected through an overseas securities market.
119
What is a combined offering?
One in which the proceeds will be split between the issuing company and selling shareholders
120
Define free writing prospectus (FWP).
Written/electronic communication, used as a disclosure document, that does not meet statutory prospectus standards
121
For tender purposes, is being long an ABC call option equivalent to a long ABC stock position?
No. Investors must exercise a long call to participate in a tender offer.
122
Define blank-check (or shell) company.
A company early in the development stage with no specific business purpose
123
As it applies to Regulation D offerings, who would be considered an accredited investor?
An institution, an officer/director of the issuer, or an individual who meets a financial test
124
What instructions must be issued to ensure that no illegal sale occurs for securities acquired privately?
Stop transfer instructions
125
To indicate that private placement securities are unregistered/restricted, a _______ is placed on the certificates.
To indicate that private placement securities are unregistered/restricted, a legend is placed on the certificates.
126
A Regulation A+ Tier 2 exemption is permitted for issuers that raise no more than $__________ over 12 months.
A Regulation A+ Tier 2 exemption is permitted for issuers that raise no more than $50 million over 12 months.
127
To blue sky an issue means to register the offering at the ______ level.
To blue sky an issue means to register the offering at the state level.
128
When must the board of directors of the company, subject to a tender offer, advise its shareholders regarding the offer?
Within 10 days from the date the tender is made
129
What is the purpose of Rule 145?
To be sure that securities acquired through reclassification are subject to registration and prospectus requirements.
130
What business structure features double taxation at both the corporate rate and the owner's personal rate?
C Corporation
131
True or False: To be a WKSI, the issuer must be a reporting company and have a certain public float of debt or equity.
True
132
What amount of time that must elapse before debt securities issued under Regulation S may be resold into the U.S.?
40 days. The securities would remain exempt from registration.
133
True or False: The person making a tender offer may purchase the subject company's nonconvertible bonds.
True. During a tender period, nonconvertible bonds of the subject company may be purchased, but not convertible bonds.
134
An ADR issued without the involvement of the issuing foreign company is an ____________ ADR.
An ADR issued without the involvement of the issuing foreign company is an unsponsored ADR.
135
True or False: Registration provisions apply when securities are offered publicly.
True
136
Where must issuers be located to qualify for a Reg. A exemption available for raising a limited amount of capital?
The issuers must be located in the U.S. or Canada.
137
For a private placement, what must purchasers sign to acknowledge the restricted nature of the securities?
An investment letter
138
What is a benefit to achieving WKSI status?
The company is permitted to offer securities without SEC review.
139
Who attends the final due diligence meeting held prior to the effective date?
The issuer, underwriter, and other interested parties
140
On what must 95% of a REIT's gross income be derived?
Real estate-related activities, interest received on mortgages, or dividends and interest
141
True or False: ADRs can be quoted on the NYSE, Nasdaq, the OTCBB, or the Pink Sheets.
True
142
True or False: A business entity formed in Mexico may use the Regulation A exemption.
False. Only U.S. and Canadian issuers may utilize the Regulation A exemption.
143
`What is one disadvantage to offering securities through a private placement?
The offering is limited to only certain types of investors.
144
Partnerships distribute ____% of income to owners, while REITs generally distribute ___% of income to shareholders.
Partnerships distribute 100% of income to owners, while REITs generally distribute 95% of income to shareholders.
145
An issuer with $75 million outstanding voting shares would be placed in what category?
Seasoned Issuer
146
True or False: Regulation A limits the amount of capital that may be raised, but not number of shares that may be sold.
True
147
For an Iowa Rule 147 offering, to whom may an Iowa resident sell without complying with the nine-month holding period?
Another resident of Iowa
148
True or False: Canadian companies are not eligible to use the Regulation A+ exemption.
False. Both U.S. and Canadian companies are eligible to use the Regulation A+ exemption.
149
Under Regulation S-K, what are the requirements for presenting projections?
They must be clear and not misleading, and an appropriate time frame must be used.
150
True or False: C Corporations and limited liability companies (LLCs) allow for an unlimited number of shareholders.
True
151
What is the primary purpose of the Securities Act of 1933?
Provide investors with full and fair disclosure regarding new issues (prospectus)
152
If ABC's nonconvertibles are in registration, an underwriter of the deal may comment on the issuer's _______________.
If ABC's nonconvertibles are in registration, an underwriter of the deal may comment on the issuer's common stock.
153
True or False: A red herring may be filed as a part of a registration statement and used before the effective date.
True
154
Regulation D offerings under Rule 504 may not exceed $___ million.
Regulation D offerings under Rule 504 may not exceed $5 million.
155
An issuer with $700 million outstanding voting shares would be placed in what category?
Well-Known Seasoned Issuer (WKSI)
156
True or False: 100% of investors must be state residents to qualify for the Rule 147 intrastate exemption.
True
157
True or False: The TCPA requires the caller to disclose her BD's CRD number.
False
158
Which type of annuity is considered a security, fixed or variable?
Variable
159
A REIT will not be taxed on its income if it distributes ____% of it to shareholders.
a REIT will not be taxed on its income if it distributes 90% of it to shareholders.
160
Where would a customer find information about the disciplinary history of a member firm and its RRs?
Public Disclosure Program (PDP), also known as BrokerCheck
161
The holding period for unregistered (restricted) securities under Rule 144 is __________.
The holding period for unregistered (restricted) securities under Rule 144 is 6 months.
162
True or False: The person making a tender offer may NOT engage in open market purchases of the subject company's stock.
True
163
A Regulation A+ Tier 1 exemption is permitted for issuers that raise no more than $__________ over 12 months.
A Regulation A+ Tier 1 exemption is permitted for issuers that raise no more than $20 million over 12 months.
164
`Complete the following statement: The SEC requires a securities offering to register unless it is _______.
Complete the following statement: The SEC requires a securities offering to register unless it is exempt.
165
What is a QIB?
Qualified Institutional Buyer (institutions defined under Rule 144A)
166
Rule 415 establishes the requirements for _______ registration.
Rule 415 establishes the requirements for shelf registration.
167
The SEC will issue a ____________________ to indicate that a registration statement is inadequate.
The SEC will issue a deficiency letter to indicate that a registration statement is inadequate.
168
True or False: The SEC judges an offering’s investment merit and provides approval.
False
169
What are some examples of a free writing prospectus?
Offering term sheets, e-mail, press releases, and marketing materials
170
What requirement is established by Regulation S-X?
The requirement that a registrant maintain effective internal controls in connection with its financial reporting
171
To satisfy WKSI status, within 60 days of determination, an issuer must have how much public float in debt or equity?
A public float of $700 million in equities or $1 billion in aggregate debt issuances in the previous three years
172
A well-known seasoned issuer (WKSI) is able to file an ASR. What does ASR mean?
Automatic Shelf Registration
173
What types of events are exempt from Rule 145?
Stock splits, reverse splits, or adjustments in par value
174
True or False: Using a private placement to offer securities is a faster, less expensive method than a public offering.
True
175
Public offerings of securities require the delivery of a ___________.
Public offerings of securities require the delivery of a prospectus.
176
Under the TCPA, time-of-day restrictions are applied based on the ____________ of the call.
Under the TCPA, time-of-day restrictions are applied based on the destination of the call.
177
True or False: An offering memorandum is required to be delivered to purchasers in a private placement.
False. An offering memorandum is required to be provided to nonaccredited investors only.
178
In the after-market, for how long must a prospectus be provided following an IPO of a stock to be listed on an exchange?
25 days
179
True or False: S Corporations may be foreign corporations with multiple classes of stock.
False. S Corporations must be domestic corporations with only one class of stock.
180
True or False: An incentive for buying securities through a private placement is the liquidity of the investment.
False. Securities acquired through a private placement are illiquid since their sale is restricted.
181
The number of investors who may purchase stock under a Regulation A offering is __________.
The number of investors who may purchase stock under a Regulation A offering is unlimited.
182
For what offerings is there no after-market prospectus requirement?
For follow-on offerings of exchange-listed stocks
183
Regarding a new issue, when is the final due diligence meeting held?
Prior to the anticipated effective date
184
Who evaluates the risks and merits of a private placement for a nonaccredited investor?
The purchaser representative
185
True or False: A covenant in a bond indenture may restrict the sale of an asset being used as collateral.
True
186
Rule 147 offerings may not be sold to an out-of-state investor for ____ months following the last sale of a new issue.
Rule 147 offerings may not be sold to an out-of-state investor for six months following the last sale of a new issue.
187
What is FINRA?
The Financial Industry Regulatory Authority; created by the merger of the NASD and NYSE regulatory authorities
188
True or False: Rule 144A securities are only equities.
False. Rule 144A securities may be equity or debt.
189
True or False: The preliminary prospectus (red herring) will include the final offering price.
False. The red herring may give a price range, but will not include the final price.
190
Prior to a PIPE offering, what is an RR permitted to do?
Solicit and accept indications of interest
191
What is a Private Investment in Public Equity (PIPE)?
When a BD acts as a placement agent for restricted securities of an issuer whose securities are already publicly traded.
192
For how long must a prospectus be made available in the secondary market for an exchange-listed IPO?
25 days
193
True or False: During the cooling-off period, sales may be effected and money may be accepted.
False. These would be prohibited practices during the cooling-off period.
194
How are C Corporation profits taxed?
At both the corporate and shareholder level (double taxation)
195
The Securities Act of 1933 regulates ____________.
The Securities Act of 1933 regulates new issues.
196
A REIT must have a minimum of ____ shareholders, with no more than ____% of the trust owned by _____ or fewer persons.
A REIT must have a minimum of 100 shareholders, with no more than 50% of the trust owned by five or fewer persons.
197
For how long must a prospectus be provided in the after-market for a non-exchange IPO?
90 days
198
True or False: A Private Investment in Public Equity (PIPE) is a form of private placement.
True
199
What are the requirements for a WKSI to file a shelf registration that will be effective for three years?
The offering must begin immediately and the issuer must be eligible to file Form F-3 or S-3.
200
A BD acting as an underwriter for an issuer's debt may publish research reports on that issuer's ______________.
A BD acting as an underwriter for an issuer's debt may publish research reports on that issuer's common stock.
201
When is the registration of a well-known seasoned issuer (WKSI) effective?
Immediately at the time of filing with the SEC
202
Who frequently purchases securities through PIPE offerings?
Hedge funds
203
Define initial public offering (IPO).
A company's first public offering of securities
204
True or False: A significant goal of the Securities Act of 1933 is to prevent fraud in the sale of new issues.
True
205
What is the name of the disclosure document used for a private placement?
An offering memorandum, also called a private placement memorandum (PPM)
206
What are the details related to the Section 4(6) exemption?
An exemption is provided if securities are sold to accredited investors and no more than $5 million of capital is sold.
207
True or False: Purchaser representatives must pass a specific exam or be certified to act in this capacity.
False. There is no specific qualification required to be appointed as a purchaser representative.
208
`For spouses to be considered accredited, they must have income of $_______ in each of the last two years.
For spouses to be considered accredited, they must have income of $300,000 in each of the last two years.
209
How many classes of stock may be issued by C Corporations and limited liability companies (LLCs)?
Both may issue multiple classes of stock.
210
Under Reg. S-X, what must the CPA's attestation report include?
The CPA's opinion of the firm's internal controls
211
On what is the length of time a prospectus must be sent in the after-market based?
The amount of information available to the potential purchaser
212
True or False: Flexible management structure is a characteristic of a limited liability company (LLC).
True
213
What may take place during the post-registration period?
Sales may be confirmed, money may be accepted, and the final prospectus may be delivered.
214
Where do unsponsored ADRs generally trade?
In the OTC market (OTCBB or Pink Sheets)
215
True or False: Shelf registration may be used by issuers other than WKSIs and seasoned issuers.
True. Other eligible issuers may use a shelf registration, but it is effective for two years.
216
True or False: After-market prospectus requirements do NOT apply to dealers not involved in the original distribution.
False. After-market prospectus requirements apply to dealers who are, or are not, involved in the original distribution.
217
The SEC ____________ clause must be included in the prospectus for a new issue.
The SEC No Approval Clause must be included in the prospectus for a new issue.
218
True or False: The person making a tender offer may purchase the subject company's convertible bonds.
False. During the tender period, the subject company's nonconvertible bonds may be purchased, but not its convertibles.
219
What are the requirements to qualify for a Tier 1 exemption under Regulation A+?
A maximum offering of $20 million over 12 months, with no more than $6 million being offered by selling shareholders
220
Once Form 144 is filed, owners have __________ to sell their securities.
Once Form 144 is filed, owners have 90 days to sell their securities.
221
True or False: Shelf Registration gives flexibility to the issuer by allowing delayed or continuous sales.
True
222
If WKSI status is lost after the filing of the automatic shelf registration, how long may the offering continue?
Until the filing of the next Form 10-K
223
Under Reg. S-K, if outside review is conducted, what disclosures must be made?
Extent of review, reviewer's qualifications, material facts of how the review was sought/obtained
224
When are securities ineligible for the Rule 144A exemption?
When the issuer has the same class of securities listed on an exchange.
225
An ADR issued in cooperation with the issuing foreign company is a __________ ADR.
An ADR issued in cooperation with the issuing foreign company is a sponsored ADR.
226
Shelf Registration is valid for up to _____ years.
Shelf Registration is valid for up to 3 years.
