Series 79 - deck 2 Flashcards

Question

10-Q

Answer 1

Part I - MDA and Financials - qtr end, prior year end on BS, 4 IS Qtr, YTD, Prior year quarter, Prior YTD; Disclose any change to market risk factors Part II - Exhibits, supplements, and certifiations *Major shareholders are not in 10-Q***

Answer 2

Newsworthy event - earnings announcement, merger, bankruptcy, default on a loan, pledging key assets as collateral, delisting or transferring exchanges, change in auditors, change in company address ****class action lawsuit again company would not require an 8-K

Answer 3

Large accelerated filer (700 million float and SEC filer for a year), Accelerated filer (greater than 75 million float and SEC filer for a year), Non-accelerated filer (less than 75 million or SEC filer for less than a year), Smaller reporting company (less than 75 million or less than 50 mm in revenues)

Answer 4

Large accelerated (10-K - 60 days, 10-Q - 40 days, and 8-K for 4 days), Accelerated filers (10-K for 75 days, 10-Q - 40 days, 8-K - 4 days), Non-accelerated filer (10-K - 90 days, 10-Q - 45 days), Smaller reporting companies (10-K - 90 days, 45, 4)

Answer 5

Preliminary proxy statement - lists lots of stuff including any director who did not attend 75% of meetings; Not on proxy****voting record of board members****

Answer 6

Definitive Proxy statement - always requried - goes to shareholders and SEC PRE14A is filed 10 days before def Proxy to shareholders, DEF14A is filed 20 days prior to annual meeting

Answer 7

10K - CEO, CFO, must certify 10Q - Any member of senior management Certification says CEO has read the document, document contains accurate description of company; Must disclose off balance sheet liabilities SOX also says that board of directors must consist primarily of independent directors (not employed by company) and AUDIT committee must consist entirely of independent directions (NYSE & NASDAQ requries to hava financial expert on audit committee)

Answer 8

Personal loans to company executives; Also requires (section 404) for CEO to certify firm's internal controls for financial reporting. ****ok to reimburse for home office expense***

Answer 9

Going private

Answer 10

When an investor becomes and insider; ***must be filed wihting 10 days of becoming an insider****

Answer 11

Any time an insider trades stock on open market ***within 2 days of transaction****

Answer 12

Filing requirements - Filed annually for any change in owernship not via the open market (receiving shares as comp)****45 days of fiscal year end****

Answer 13

Can't sell stock short, Can't write uncovered calls, can't engage in short swing profits (6 months or less), can't use personal information for inside gain

Answer 14

Any time an investor becomes a 5% shareholder wiht some intent to influence (activist investor); Filing deadline wihtin 10 days of transaction wi issuer,k SEC, and exchange where security trades. Must disclsoe their intent - Change in 1% or more from previous (3 Investors own 3% of company each, agreement to vote same way - must file a 13 D!"

Answer 15

5% shareholders with no intent to influence issuer (passive investor)***must be signed within 45 days of fiscal year end***

Answer 16

Institutional investment managers - managing portfolio of $100mm ***due within 45 days of every quarter*** Investor must disclose all of its long equity positions *****To identify large shareholders - 13D To review other holdings - 13F****

Answer 17

Bake off, Competitive bid (Based solely on price), Syndicate manager and Issuer sign the Underwriting agreement

Answer 18

Firm Commitment - (firm purchase all securities and sells to public - responsible for anything outstanding), Standby (shares are issued to existing shareholders, firm will take on any that weren't claimed), Best Efforts (Act as an agent wi no liability for unsold shares), All or none (must sell all securities or deal is done - funds held in escrow), Mini-max(Underwriter must sell min amount or entire deal is canceled - funds held in escrow)

Answer 19

Material adverse change - specifrices a series of material adverse events - Underwriter can kill the deal for these - criminal indictment against company, etc.

Answer 20

Not the syndicate's desk primary responsibility to prepare prospectus

Answer 21

Syndicate manager gets 100% (managers fee (20%) + Underwriting fee (20%) + selling concession fee (60%)), Syndicate members are entitled to 80%, Selling concession / Selling group are entitled to 60%

Answer 22

Oversubscription (upsize price, increase allotment), Green shoe clause (increase the size of the offering by 15% can be exercised up to 30 days after the effective date)

Answer 23

Always reduce the underwriting fee; Don't reduce manager fee or selling concession!!!

Answer 24

Prior to trading ****limit orders only thing that can be accepted****

Answer 25

* *****After an IPO when can security trade away from the exhcange? AFter stock has traded on the exchange**** * ***doing a follow on offering when 35% of the stock is held by institutional investors***** block trade RISK

Answer 26

Payment for bona-fide expenses is not considered compensation Issuer pays for syndicate expense is considered compensation (underwriters' counsel, tombstone Ads)

Answer 27

Restricted persons can't invest in IPO's - These include: FINRA member firms and their employees, finders and fiduciaries of the managing underwriter; family member of restricted person Permitted purchasers - family can invest if they work for the firm, if restricted person owns no more than 10% - Standby agreements - broker dealer can invest if they agree to do so before the effective date and no one else wants the shares and they agree to hold the shares for 3 months.

Answer 28

Issuer wants to hire its own subsidiary to underwrite its IPO - OK but must also hire QIU

Answer 29

Market Maker activities during syndication; Rule applied to both subject and reference securities. Can't bid up the stock or take steps to do so

Answer 30

Begins 5 Days before determination of offer price Begins 1 day (ADTV at least 100k, publicfloat at least 25 mm) Actively traded securities - no restricted period (ADTV at least $1mm, public float at least $150mm) Rule also applies during M&A deals. Restricted period begins the day proxy material are sent to shareholders

Answer 31

dissemination fo researhc reports, brokerage transactions, exercise of any right, warrant, option, or conversion privilege, Bona fide basket transactions, Rule 144A transactions

Answer 32

No disclosure requirements, within 30 days of effective date and aboove offer price can exercise the shoe.

Answer 33

1- Underwriting converts, the the rule applies to the stock 2- M&A restricted period begins when proxy sent to shareholders 3- Exercising the Shoe

Answer 34

US gov't, muni bonds, commercial paper, commercial bank securities, eurodollars / eurobonds - ETFs, ADRs, need to be registered

Answer 35

Reg A - for small business (less than 5mm in 12 month period can avoid full registration)

Answer 36

Sell inone state and avoid SEC registration 80% of revenues from the state, 80% of offering proceeds are used in state, 80% of issuer's assets are in the state; Only to state residents (entire issue) resale to non-residents only 9 months after sale

Answer 37

Offerings outside the U.S. (US company selling overseas) - US residents can't purchase the securities, every investor must have an overseas address; After seasoning periods (40-days for debt, 6 months and rule 144 for equities) securities can be purchased in the US. Sold on off shore exchanges.

Answer 38

Sections 4(2) & 4(6) of 33 Act - registration not required because no public offering; Investors should expect to see information that is substantially similar to public offering - should receive a PPM; every investor has to be sophisticated

Answer 39

Safe harbor Accredited investors (assumed to be sophisticated) includes officers and directors, insitutional investors, individual investors (200,000 in income past two years, $1mm in networth, $300k if married, 1 mm in net worth) Non-accredited investors may need purchaser representative (become sophisticated)

Answer 40

Private placement up to $1mm (Rule 504) - Unlimited number of non-accredited investors Private placement in excess of $1mm (rules 505/506) <= 35 non-accredited investors

Answer 41

Permits the sale of restricted stock as well as Reg S overseas issuance to states Permits the sale of control stock (stock issued by a corporate insider...corporate insider has volume restrictions over 90 day period) Insider must file form 144 to sell shares and has up to the date of sale to file***** Volume limits greater of 1% of the oustanding shares or average reported weekly trading volume during the 4 weeks preceding the sale****** (once every 90 days)

Answer 42

Required in an all stock transaction

Answer 43

Need to be true in all material respects

Answer 44

with Direct Participation Program there are three components: bona fide issuer expense, underwriting compensation, and due diligence expenses connected to the offering

Answer 45

SEC officials are not granted access to the data room

Answer 46

A non-equity research may only evaluate an analysts report prior to publication to ensure factual accuracy

Answer 47

Must provide access if asked. Can be electronically if agreeable to the customer

Answer 48

- appropriately qualified persons - must have filed form BD - satisfied state requirements - become an SRO and member of SIPC - Registration with SEC

Answer 49

Under Regulation M Rule 104, an underwriter can stabilize a new issue no higher than the most recent transaction price or the best independent bid, whichever is greater.

Answer 50

Under SEC Rule 425, communications regarding a business combination transaction may be distributed to the public but are defined as a prospectus and must be filed with the SEC no later than the date of first use.

Answer 51

A call schedule as defined in a bond’s indenture lists each call date of an existing issue and the corresponding price at which the issue can be called. A bond’s call schedule and call prices depend on its term and coupon. They are typically set at four years (“Non call-4” or “NC-4”) for a seven/eight-year fixed rate bond and five years (“NC-5”) for a ten-year fixed rate bond.

Answer 52

Lagging economic factors change after the economy has already begun to follow a particular pattern or trend. Examples of lagging indicators include: • Interest rates, particularly the prime rate, which is a key bank lending rate that is often used as a reference rate of interest for credit cards and other loan rates • unemployment rates • corporate profits • labor cost per unit of output

Answer 53

The Termination Provisions of the Definitive Agreement detail the circumstances under which one party may terminate the agreement rather than complete the deal. In some circumstances, one party may owe a termination fee (“breakup fee”) to the other party. Examples include: • if the seller terminates the deal to take a better offer, the seller pays a breakup fee to the buyer • if the seller terminates because the buyer cannot come up with financing, the buyer may owe a breakup fee to the seller The circumstances under which one party may terminate the agreement are clearly defined. Business trends do not typically constitute grounds for termination and receipt of a break-up fee post-signing.

Answer 54

Misappropriation occurs when persons steal information from their employer and trade on that information in any stock, not just their employer’s stock. The misappropriation theory broadens the liability for misuse of inside information and is illegal.

Answer 55

For non-institutional clients, the only type of transaction in which customer suitability information is not required is in money market mutual funds.

Answer 56

Regulation A permits exemptions for issuers of no more than $5 million in a 12 month period. Issuers must provide an offering circular for disclosure to potential buyers. Issuers are not required to file an S-1 registration statement, which is the full-blown registration statement required for non-exempt offerings.

Answer 57

``` Leading indicators change before the economy starts to follow a particular pattern or trend. Leading economic indicators include: • Bond yields • building permits (new private housing) • industrial production rates • money supply • S&P 500 • average of weekly unemployment insurance claims • changes in business inventories ```

Series 79 - deck 2 Flashcards

(82 cards)