Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Regulations > Securities Act of 1933 > Flashcards

Securities Act of 1933 Flashcards

1
Q

What does the securities act of 1933 apply to?

A

PRIMARY markets

- Non-exempt new issues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are issues under SA 1933 required to have?

A
  • They are required to have a prospectus BEFORE purchase. (this only applies to non-exempt issues)
  • They are also required to have a Registration statement with the SEC
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the 20 day cooling off period?

A
  • Occurs once registration is filed (need full and fair disclosure)
  • The issue can’t be sold during this period, but distribution of prelim. prospectus is allowed
  • No orders or sales can be made, only indications of interest can be taken
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does the SEC do with registration statements for issues?

A

They do NOT approve or disapprove - they only say if there is sufficient disclosure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

When must prospectus be delivered?

A

Primary non-exchange listed issue - 90 DAYS

Secondary for a non-exchange listed issue - 40 DAYS
- this applies when the issuer has outstanding stock and wants to issue more

Exchange listed issues - 25 DAYS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is access equals deliver?

A

If the firm KNOWS the customer has internet access (proof of being online before via email, etc.) then electronic deliver of the prospectus is sufficient

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are E-Z registration rules?

A

Regulation A - small dollar amounts

Rule 415 - shelf registration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is Regulation A?

A

Makes it easier/cheaper for smaller start up companies to raise capital. A simplified reg. statement is filed with SEC and 20 day cooling off period is required. There are 2 tiers of capital raising

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the 2 tiers of regulation A?

A

Tier 1 - offerings up to $20MM within a 12 month cooling off period (no audited FS required)

Tier 2 - Offerings up to $50MM in 12 month period. Audited FS Required. There is also a limit of non-accredited investors that can buy in

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the limit for which non-accredited investors can buy in to a Tier 2 Reg. A offering?

A

The greater of:

  1. 10 percent on net income
  2. 10 percent of net worth
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What type of document is required for a Reg. A offering?

A

No prospectus is required, but a disclosure document called and Offering circular (Offering Memorandum) must be delivered to customers at least 48 hours prior to sale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between the pre 20 day cooling off period and cooling period for a regular offering and a Reg. A offering?

A

Reg A offerings allow issuers to distribute promo materials to prospective purchasers PRIOR to registration statement and THROUGHOUT the cooling off period. This is prohibited for regular offerings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is rule 415 - shelf registration?

A

This is for add on offerings for companies that have already registered with the SEC. Allows for “blanket” registration for 3 years, allowing company to sell whenever

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

When must the SEC be notified of a Rule 415 offering?

A

2 days in advance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the requirements to qualify for Rule 415 - self registration offerings?

A
  • Public for at least 1 year
  • Current in SEC filings
  • Public float of at least $75MM
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does section 4(2) allow regarding private placements?

A

Private placements can be sold to INSTITUTIONS and ACCREDITED investors that can fend for themselves

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What does section 4(6) exemption allow?

A

An offering (in which there is no advertising allowed) of no more than $5MM made ONLY to accredited investors are exempt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the Exempt issues under the SA 1933?

A
  • US govt, agencies, Municipals, and Foreign govt

- Issuers ALREADY regulated under OTHER laws

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the issuers that are exempt under the SA of 1933 because they are already regulated under other laws?

A
  • Bank issues
  • Insurance company offerings (except variable annuities)
  • Common carrier issues (railroads, trucking co’s)
  • Public utility issues
  • Non-profit and charities
  • Banker’s acceptances and Comm. Paper (270 mat. or less)
  • Small Business Investment company issues (SBC)
20
Q

What are Intrastate offerings?

A

These are exempt transactions under Rule 147. Feds have no authority if all activity is within the state. 100 percent of issue must be sold to state residents, and 80 percent of issuers sales and assets and proceeds in that state. Complies with state blue sky laws

21
Q

How long before issues can be sold to people outside the state in a Rule 147 offering?

A

6 months after the sale

22
Q

What is a Private Placement (Regulation D)?

A
  • A max of 35 non-accredited investors and an unlimited amount of accredited investors are allowed
  • Purchasers must sign an Investment Letter stating he knows issue is unregistered, etc.
23
Q

What is a purchaser representative?

A

Can be used if a purchaser cannot fully evaluate a Reg. D (private placement issue). This is usually a lawyer or accountant

24
Q

What qualifies a “wealthy” investor under Reg. D?

A
  • Net worth 1 million OR
  • Annual income of $200K OR
  • Officer/director if issuer OR
  • Institutional investor
25
Q

What must be signed for purchasers of a Reg D offering?

A

Accredited Investor Questionnaire

26
Q

When is it allowed for a Reg. D offering be advertised?

A

If the offering EXCLUDES non-accredited investors

27
Q

What is the disclosure document for a Reg. D offering?

A

Offering circular/offering memorandum or Private Placement MemoranduM

28
Q

What is restricted stock?

A

Never sold in public markets unless registered, unless it is sold through a Rule 144 exemption

29
Q

What is a form D?

A

An issuer files a Form D to the SEC to claim exemption with the SEC for an exemption to sale restricted stock 15 days AFTER the first sale of securities

30
Q

What are Rule 144 transactions?

A

Allows the holder of restricted stock to sell publicly if:

  • issuer has registered shares outstanding and is current in SEC filing
  • Seller files form 144 prior to sale date
  • Securities have been held for SIX months and are fully paid
31
Q

How often can a seller file a Form 144 annually?

A

No more than 4 times in a year (every 90 days)

32
Q

What is the maximum sale amount for a Form 144?

A

Greater of:

  1. One percent of outstanding shares OR
  2. Weekly average of last 4 weeks trading volume
33
Q

What is the dribble rule?

A

An investor with a large stock holding may not sell all of his shares at one time without filing. He can only “dribble” the stock into the market w/o filing with the SEC

34
Q

What is Control Stock?

A

Stock held by officer, director, 10% shareholder, or affiliated person (spouse) of one of these

35
Q

What amount of stock is not required for filing?

A

Small orders can be sold - up to 5,000 shares no more than $50,000 every 90 days

36
Q

What must the firm handling a 144 transaction must act as?

A

The AGENT

37
Q

When can shares of a 144 transaction be sold without the volume limitations?

A

If the holder is no longer affiliated with the company and has held the shares for at least 6 months. Additionally, the person must have been unaffiliated with the company for at least 3 months

38
Q

What documentation is maintained by broker effecting a 144 transaction?

A
  • Copy of form 144
  • Issuers Rep letter
  • Brokers rep letter
39
Q

What is Rule 144A

A

Different from Rule 144! This allow INSITUTIONAL investors (QIB’s - Qualified Institutional buyers) to trade PRIVATE placements

Also allows any QIB’s with at least $100MM in securities to purchase unregistered securities

40
Q

What is the PORTAL?

A

The Electronic marketplace for the trading of 144A units from QIB to QIB. This is owned in part by NASDAQ

41
Q

What is crowdfunding?

A

Allows start-ups to raise capital by issuing private placement unregistered securities to any type of investor (accredited or not)

42
Q

What is the max amount that can be raised for Crowdfunding?

A

Maximum of $1 million

43
Q

What are the limits on the Amount invested in 12 month period for crowdfunding?

A
  • Investors net income/worth under $100K: greater of $2,000 or 5 percent of the lesser of net income/net worth
  • Investors with NE/NW of $100K or greater: 10% of the lesser annual income or net worth, but NEVER more than $100K
44
Q

Is a prospectus required for crowdfunding?

A

No - but a disclosure document must be given

45
Q

What are the breakouts of offering amounts and the related required FS?

A
  • 100K or less: certified FS by executive officer of company
  • 100K - 500K: Reviewed FS by accountant
  • Offerings of more than 500K: Audited financial statements with auditor’s report (exception is if this is the first time issuer is raising capital - then FS can simply be reviewed by accountant
46
Q

What is Rule 145 under SA of 1933?

A

Certain corporate reorganizations require the filing of a registration statements. These include?

  • Subbing one security for another
  • merger/consolidation
  • Transfer of assets from one person to another ins consideration for issuance of new securities

Regulations (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions