S-79 Packet 2

Question 1

How long are investors required to hold stock in C or S-Corp in order to receive favorable tax rates

Answer 1

1 yr

Question 2

Master Limited Partnerships are likely listed on..

Answer 2

an exchange

Question 3

What information is included on a registration statement?

Answer 3

1. Issuer description of business 2. use or proceeds 2.) cap table 3. underwriter names and compensation 3.) officers, directors and 10% shareholders

Question 4

What are the time limit requirements for re-filing outdated registrations?

Answer 4

130 days for season issuer or larger / 135 days for smaller issuers

Question 5

What is it called when an issuer discusses transaction after the decision to go public but before an issuer files a registration statement?

Answer 5

Gun-jumping

Question 6

What are blue-sky laws?

Answer 6

State securities laws require issuer/underwriter to be appropriately registered in each state where securities are sold

Question 7

How long is the cooling off period

Answer 7

20 days

Question 8

What activities are syndicate members permitted to engage during the cooling off period?

Answer 8

1. Tombstone ad 2.) Road show 3.) FWP

Question 9

Is the prelim prospectus (“red herring”) an offer for securities?

Answer 9

NO!

Question 10

What is form 424B

Answer 10

A prospectus

Question 11

When must a prospectus be delivered after the effective date

Answer 11

at the absolute latest of trade confirmation / access = delivery

Question 12

When must final version of the prospectus be filed with the SEC?

Answer 12

Within 15 days of the effective date

Question 13

How long is the automatic shelf-registration for WKSI?

Answer 13

3 years

Question 14

When can WKSI use a FWP?

Answer 14

any-time

Question 15

When does WKSI pay registration filing fees?

Answer 15

“Pay-as-you-go” (not paid until securities are sold)

Question 16

When can seasoned, unseasoned and non-reporting issuer use a FWP?

Answer 16

Post-filing

Question 17

When do seasoned, unseasoned and non-reporting issuer have to pay registration filing fees?

Answer 17

Upon filing

Question 18

What are the size requirements for a registered issuer per SEC Act of 1934?

Answer 18

1.) 2,000 shareholders 2.) >= $10 Million in assets

Question 19

What filing includes a company’s market-risk disclosures?

Answer 19

Form 10-K

Question 20

Where can you learn about a company’s shareholders?

Answer 20

Form 10-K, proxy statement

Question 21

What event does NOT trigger an 8-K

Answer 21

class-action lawsuit

Question 22

What is the significance of CEO signing 10K

Answer 22

Signify’s CEO has read the document and document contains accurate information

Question 23

What Form is required when a person becomes an insider?

Answer 23

Form 3 - within 10 days

Question 24

What form type is required when an insider transacts in it’s stock / filing deadline?

Answer 24

Form 4 - within 2 days

Question 25

What form is required for corp. insider change in ownership not via the public market? / filing deadline?

Answer 25

Form 5 - 45 days

Question 26

What is the time period for not engaging in a short swing profit

Answer 26

6 months or less

Question 27

What is the form an investor who has acquired 5% of the outstanding stock with the intent to control required to file? / filing deadline?

Answer 27

Schedule 13D / within 10 days

Question 28

Exam question: 3 investors own 3% of company, agree to vote shares same way - are they required to file a 13D

Answer 28

MUST file a 13D because they are acting together

Question 29

What is a passive beneficial ownership report form called for a 5% shareholder? / Filing deadline?

Answer 29

Schedule 13G / 45 days of calendar yr end

Question 30

Who receives proceeds in a primary offering

Answer 30

The issuer

Question 31

What is the increase to a company's net worth in a secondary offering

Answer 31

ZERO!

Question 32

A privately held firm with 2 million shares files an S-1 to register an IPO / firm plans to register 2 million shares of which 1 million is primary and the other 1 mm is secondary. How many shares are outstanding after the IPO

Answer 32

3 mm shares oustanding = Existing + primary

Question 33

What are competitive bids based on?

Answer 33

Price (ie. municipal bonds)

Question 34

What parties is the Underwriting Agreement between?

Answer 34

Issuer and lead left manager (underwriter)

Question 35

Institutional Pot accounts for what % of shares?

Answer 35

60-75%

Question 36

What is a jump-ball arrangement?

Answer 36

institutional investor receiving the shares assigns credit for the sale to a specific underwriter.

Question 37

What type of orders are accepted before a stock trades

Answer 37

Limit orders (specific price)

Question 38

What is the biggest risk a broker faces underwriting an issue where the issuer has a large constitution of shares owned by a few institutional investors

Answer 38

Block trade!

Question 39

What is purpose of Corporate Finance Dept. of FINRA and transactions do they examine

Answer 39

reviews fairness and compensation of underwriters / equity, High yield and convertible bonds

Question 40

When must syndicate manager notify CFD once SEC declares a deal effective?

Answer 40

within 1 day of a deal becoming effective

Question 41

When can Broker-Dealer invest in an IPO?

Answer 41

Only if they agree to do so 1. before the effective date 2.) nobody else wants the shares AND 3. agree to hold for 3 months

Question 42

Is an issuer allowed to hire its own subsidiary to underwrite IPO?

Answer 42

Yes, BUT also needs a Qualified Independent Underwriter

Question 43

What is the reference security under Reg-M

Answer 43

Any security in which subject security can be converted.

Question 44

When can a greenshoe option be exercised?

Answer 44

If issuer price is above POP, within 30 days

Question 45

What securities are exempt under the Securities Act of 1933?

Answer 45

1.) US government bonds 2.) municipal bonds 3.) eurodollars / eurobonds 4.) commercial paper 5.) commercial bank securities

Question 46

What securities are NOT exempt?

Answer 46

Mutual funds, ETFs and ADRs

Question 47

What is Reg-A?

Answer 47

Issues of <=$5 million in a 12 month period (must be aggregated over 6 months) are exempt

Question 48

What is Rule 147?

Answer 48

Securities registered in 1 state Criteria 1.) 80% of revenue generated from state 2.) 80% of assets in that state 3.) 80% of offering proceeds used in the state - state residents can sell in 9 months

Question 49

Regulation S? Can U.S. residents purchase?

Answer 49

Allows for offerings outside the U.S. (US residents can not purchase unless they have an overseas address)

Question 50

What is the seasoning period for Reg. S?

Answer 50

Debt - 40 days | Equity - 6 months

Question 51

What does Reg D refer too?

Answer 51

clarifies private placements

Question 52

What investors are considered accredited under Reg. D

Answer 52

1.) Officers and Directors 2.) Institutional Investors 3.) Individual Investors earn > $200K ($300K if married) in past two years or $1M net worth?

Question 53

Who must non-accredited investors have

Answer 53

Purchaser representative

Question 54

How many non-accredited investors can a private placement > $1 million have

Answer 54

35 (with purchaser representation)

Question 55

What type of investors are examples of a private placement?

Answer 55

Angel investors, VC, PE firms, PIPE's

Question 56

What type of securities are sold in a private placement?

Answer 56

In preferential order: 1.) preferred stock 2.) common equity 3.) Debt

Question 57

What is Rule 144 and what is the general holding period?

Answer 57

Permits the sale of restricted stock (ie. any unregistered stock) / holding period of 6 months

Question 58

Does Rule 144 permit the sale of control stock? Any conditions?

Answer 58

Yes, but 1.) must already have public stock 2.) only to sale unregistered stock of an existing public company

Question 59

What are the volume limitations for Rule 144?

Answer 59

Greater of 1% of outstanding shares or avg. reported weekly trading volume during the four weeks preceding the sale

Question 60

Which is greater? 1% of 20 million shares outstanding or the average of last weeks = 37,500

Answer 60

1% of shares = 200K

Question 61

What party can NOT access the due diligence defense?

Answer 61

Issuer

Question 62

What is the term for the standard of reasonableness?

Answer 62

Prudent man test

Question 63

Who is liable for misleading information in a filing

Answer 63

anyone who is involved in the preparation of the filing (issuer, senior mgmt, underwriters, attorneys, accountants who consented to be named)