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Flashcards in issuing securities Deck (46):
1

underwriter (broker dealer) is retained by _____ to:

retained by issuer
-advise on raising capital
-sell securities to public

2

what is the securities act of 1933?

-final prospectus sent to customer
-all new issues required to registered with the SEC

3

describe process of registering an issue with the SEC

1. issuer provides a full disclosure
2. cooling off period
3. effective date (release date)

4

minimum length of the cooling off period?

20 day minimum

5

what happens during the cooling off period?

-deficiency letter
-due diligence
-indications of interest
-preliminary prospectus (red herring)

6

what is the preliminary prospectus (red herring)?

new indications of interest on a new issue before issue is actually released to sell

7

what is not included in the preliminary prospectus?

-no price
-no date

8

when is the price set on a new issue?

day before new shares are sold

9

what is the effective date and who sets it?

-date shares can be sold
-SEC sets date

10

what is an IPO?

initial public offering

11

what is an APO?

additional public offering

12

what is the green shoe doctrine?

if there's over demand for shares, you can add an additional 15% of shares without re-registering issues.

13

what is the shelf registration length for APOs?

3 years

14

describe a secondary offering

is a resale of treasury stock
-no prospectus required

15

what are the 2 types of underwriting commitments?

-best efforts
-firm commitment

16

what are the 2 types of best offer commitments?

-all or none
-mini/max

17

what components define the underwriting syndicate process?

-syndicate is formed
-selling group
-underwriting spread

18

what is the syndicate letter?

outlines the syndicate formation and is an agreement among underwritiers

19

describe a selling group's liability

selling groups have no liability for unsold securities but will make money on any shares sold.

20

describe order of the underwriting syndicate

-issuer
-underwriting agreement
-underwrites/syndicate
-syndicate letter
-selling group agreement
-selling group

21

define components of a corporate underwriting spread

-management fee
-underwriting fee
-concession

22

define components of a municipal underwriting spread

-management fee
-total takedown (additional takedown + concession)

23

managers of underwriting syndicates receive what amount in the spread?

receive full spread

24

syndicates of underwritings receive what amount in the spread?

corp spread
-underwriting fee and concession
muni spread
-total takedown (additional takedown a+ concession)

25

what will selling groups receive in the spread?

will receive concessions

26

who assumes liability for unsold shares and who does not?

-the syndicate has liability for unsold shares
-selling group does not have liability

27

what determines price of IPOs?

-similar company's prices
-current market conditions
-indications of interest (red herrings)

28

what determines price on APOs?

current price pinpoints what investors will pay

29

what is included in the prospectus?

-sec disclaimer
-use of proceeds
-financial statements
-descriptions of business
-info on officers and directors

30

when is the prospectus delivered?

with or before delivery of final confirmation

31

what are restricted people not allowed to buy?

IPOs of common stock at the public offering price (POP)

32

who is exempt from the Securities Act of 1933?

-securities issued by govt
-securities maturing in 270 days or less
-small offerings (5 mill or less maturing in 12 months)
-intrastate offerings
-private placements

33

what do banker's acceptances have to deal with?

import/exporting of foreign trades

34

describe regulation A

small offerings
-offering of 5 mill or less maturing in less than 12 months

35

describe regulation U

says that banks cannot lend money to customers in order to invest in stock market

36

describe rule 147

offering is issued within on state

37

describe registration of rule 147

needs to be registered at state-level

38

describe issuer who qualifies for rule 147

-main office in state where issue is sold
-80% of assets and business in same state

39

describe investors who qualify for rule 147

-all are residences of state
-cannot resale to nonresidents for at least nine months

40

describe regulation D

has to deal with private issued stock
ex. chick-fil-a

41

describe an accredited individual investor in a reg D issue

-1 mill min net worth (not including house) OR
-$200,000 ($300,000 joint) annual income

42

describe the limits on accredited and non accredited investors of a reg D issue

-no limit on accredited investors
-no more than 35 non accredited investors

43

describe rule 144

it has to do with the secondary resale of private placement stock

44

cheat for rule 144

-can sell greater of 1% of outstanding shares, or
-average weekly volume of most recent four weeks
-can sell only 4 times per year (have to wait 90 days between each trade)

45

describe rule 144A

-unregistered foreign securities
-institutional customers only (QIB)
-no six month holding period

46

QIB stands for?

Qualified institutional buyer