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Flashcards in Test 3 Review Deck (16)
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1

One of the exemptions under the New Issue Rule allows an equity IPO to be sold to an account if the beneficial owners are restricted persons and their ownership of the account does not exceed ____.

10%

2

If the date of publication is made on the ____ of the month or later, ownership disclosures based on the most recent month-end are required.

10th

3

An exception to the disclosure requirement in a research report of compensation received from subject issuers, may be given for future IB transactions because...

there is a possibility that a firm may disseminate material nonpublic information.

4

If a member firm wishes to refer to its previous recommendations, which rules apply?

1) The member firm must show all of its recommendations of the same type of securities made within the previous 12 months

2) The date and price of the security must be indicated

3) The fact that the market was generally rising must be disclosed, if such was the case

5

Rule 144A:

1) Permits restricted securities to be sold to QIBs without required holding periods or volume restrictions, providing liquidity to institutional investors who purchased the securities

2) Provides a faster process for issuers to raise capital by originally issuing the securities to QIBs in a private transaction.

6

A research report is defined as:

A written or electronic communication that includes an analysis of equity securities of individual companies or industries with information sufficient on which to base an investment decision.

7

What should happen if the analyst agrees that a stock is not a near-term a buy with a trader even though he has a buy rating?

A changed opinion would have to be disseminated to all investors.

8

For how long must notes used in the preparation of a research report be kept after the research report is published?

0 years; The firm is required to retain copies of any draft and the final version of a research report for 3 years following its publication, not notes.

9

An equity analyst would like to purchase nonconvertible bonds that are issued by a subject company in his coverage universe. Is the approval by the compliance department required?

Analysts and household members may not trade in any subject company securities (or derivatives) for a period of 30 days prior to, and 5 calendar days following, the publication of research. Industry rules do not require compliance department approval for the purchase or sale of any securities, except in cases where exceptions to the rules are sought.

10

The a research report does not provide the information that supports the recommendation, but offers to furnish such information to the investor upon request, what rules apply?

Information supporting a recommendation must either be provided with the recommendation or offered. The offer must be prominently displayed in at least the same type as the body copy of the material, or in smaller type if it is a different color or a bolder face. It may not be buried in a hedge clause. A simple statement such as, "Additional information is available upon request" is acceptable.

11

Regulation FD MNPI disclosure requirments:

Intentional - simultaneous public dissemination
Accidental - public dissemination w/in 24hours

12

SA's do what to research reports

Approve not review research for content and disclosure requirements.

13

An analyst may comment on unsubstantiated information if:

The source of the information is disclosed and the information itself is revealed to be unsubstantiated and the rumors are not of sensational character which might affect market conditions on the Exchange.

14

The price chart entries must be current as of the end of the most recent _____ _____, unless the publication is less than ___ days after the most recent calendar quarter.

calendar quarter; 15

15

A member firm is only permitted to offer a new issue below the public offering price to:

A member of the selling syndicate or selling group.

16

Exemptions from the definition of restricted securities include:

All debt offerings, investment company offerings such as mutual funds and exchange-traded funds, and preferred stock.