Unit 7 Flashcards
(119 cards)
1
Q
What is primary market?
A
is where securities are sold to the investing public in what are known as issuer transactions.
In other words, the issuer of the securities receives the proceeds generated by the sale of the securities.
2
Q
What does the term primary offer mean?
A
An issuer (corporation or a government) that is selling a security to raise capital
3
Q
How does the governments use the capital markets ?
A
to raise money for infrastructure projects (such as bridges, roads, dam, ports, etc.) as well as funding other programs for the public good
4
Q
Describe the secondary market
A
are where securities trade BETWEEN INVESTORS
5
Q
How can corporations raise capital quickly?
A
The sale of securities to the public allows for corporations to raise capital relatively quickly to take advantage of changes in the economy. This activity is a key piece of a modern economy, allowing corporations to raise the money needed to build factories, buy equipment, and expand the demand for labor, creating jobs. At the same time, it allows investors to grow their assets alongside the economy as a whole.
6
Q
Describe the primary offering
A
is one in which the proceeds raised go to the issuing corporation. Primary offerings are done in the primary (new issues) market.
7
Q
Public offerings of securities are regulated under the ________________________
A
Securities Act of 1933
8
Q
What is the primary purpose of the Securities Act of 1933?
A
is to require full and fair disclosure in connection with the sale of securities to the public
9
Q
Describe Securities Act of 1933
A
The act requires that a new issue, unless specifically exempted from the act, be registered with the SEC before public sale.
10
Q
What are FOLLOW-ON OFFERINGS?
A
are POPULAR methods for COMPANIES to RAISE ADDITIONAL EQUITY CAPITAL in the capital markets through a STOCK ISSUE.
11
Q
Describe an initial public offering
A
The first time an issuer distributes securities to the public
12
Q
Who are underwriters of the securities?
A
In a public offering, securities are offered and sold to the investing public. To facilitate this, companies will use the services of investment bankers and BDs
13
Q
FOLLOW-ON OFFERINGS are sometimes called:
______________________
A
additional public offerings (APOs)
14
Q
In order to SOLICIT the purchase of a mutual fund, a registered representative must provide the investor with
I. the summary prospectus.
II. the Rule 482 prospectus.
III. the statutory prospectus.
IV. the statement of additional information.
A. l and ll
B. I or III
C. II or III
D. II and IV
A
B. I or III
I. the summary prospectus.
III. the statutory prospectus.
15
Q
An investor that purchases Big City 3.5% GENERAL OBLIGATION BONDS of 2040 in the PRIMARY MARKET should receive
A. an official statement.
B. a preliminary prospectus.
C. a final prospectus.
D. a statutory circular.
A
A. an official statement.
16
Q
Your customer has purchased shares of the Littleton Lumber Company (a non listed stock) in the secondary market.
Littleton Lumbar recently completed an APO.
Your customer will RECEIVE A PROSPECTUS for the APO if the purchase is WITHIN how many days of the APO date?
A. 5 days
B. 25 days
C. 40 days
D. 90 days
A
C. 40 days
17
Q
What are IPO rules?
A
Designed to PROTECT THE INTEGRITY of the public offering process and public investors
18
Q
Who is a restricted person?
A
those NOT ALLOWED TO PURCHASE shares at the POP, are defined as follows:
- Member firms
- Employees of member firms
- Finders and fiduciaries acting on behalf of the managing underwriter, including attorneys, accountants, financial consultants, and so on
- Portfolio managers, including any person who has the authority to buy or sell securities for a bank, savings and loan association, insurance company, or investment company
- Any person owning 10% or more of a member firm
19
Q
All investors must receive a detailed disclosure document known as a _________ before purchase
A
prospectus
20
Q
Who is IMMEDIATE FAMILY ?
A
includes parents, in-laws, spouses, siblings, children, or any other individual to whom the person provides MATERIAL SUPPORT.
21
Q
If the beneficial interests of restricted persons DO NOT exceed 10% of an account, the account may __________________________
A
purchase a new equity issue.
In other words, restricted persons will be able to have an interest in an account that purchases new equity issues as long as NO MORE THAN 10% of the account’s beneficial owners are restricted persons.
22
Q
IPO rules ensure that
A
■ members make a BONA FIDE public offering of securities at the public offering price (POP);
■ members do NOT withhold securities in a public offering for their OWN benefit or use such securities to REWARD persons who are in a position to direct future business to the member; and
■ industry insiders, such as members and their associated persons, do NOT take advantage of their insider status to gain access to new issues for their OWN BENEFIT at the expense of public customers.
23
Q
Who is a PERSON IN SECURITY?
A
refers to a natural person (human being) or a legal entity (such as a corporation or a government).
ANY ENTITY that can legally enter into a contract is a person.
24
Q
What are municipalities?
A
governments at the state or lower level, such as counties and cities
25
Municipal governments issue municipal bonds and other types of debt.
This debt is sometimes called ________
"munis"
26
Who are issuers?
is a corporation, government, or other entity that is selling a security to raise capital for itself. They are issuing the security.
27
Corporations may issue both:
____________ and __________
equities
and
debt issues (stocks and bonds)
28
Larger corporations' stock (after issued) that trade on a national exchange (listed) or the Nasdaq system are called:
_____________ securities
National Market System
29
Who is the largest issuer of debt in the United States?
The US Treasury Department
30
Debt issued by the government is sometimes called
_____
"govies"
31
Who are underwriters?
are groups of BDs or investment bankers that work with an issuer to bring its securities to the market and sell them to the investing public
32
What is the role of INVESTMENT BANKERS?
help the issuer to STRUCTURE CAPITAL RAISES and, at times, FORM SYNDICATES with other underwriters to FACILITATE this money-raising process.
33
What are UNDERWRITING COMMITMENTS?
Different types of underwriting agreements require different levels of commitment from the underwriters.
This results in DIFFERENT levels of RISK for the underwriters and the issuer.
34
```
An investment banking firm that enters into a contract with a municipality to provide advice and direction on raising capital for the municipality is
A. a syndicate member.
B. a muni dealer.
C. a municipal advisor.
D. a bond dealer.
```
C
35
A CORPORATION that seeks to sell ITS OWN stock to raise money for building a new factory is an example of
A. a selling group member.
B. an underwriter.
C. a market maker.
D. an issuer.
D. an issuer.
36
```
An underwriter that assists a corporation on the sale of a new issue without taking the security into inventory is underwriting on what type of underwriting?
A. Best efforts
B. Firm commitment
C. Partial commitment
D. Full or none
```
A
37
What is the OMITTING PROSPECTUS?
is the official name for an ADVERTISEMENT for a MUTUAL FUND.
These will often take the form of a TOMBSTONE advertisement for a NEW fund.
38
Who are MUNICIPAL ADVISORS?
are a type of INVESTMENT BANKER that ADVISES MUNICIPALITIES on the ISSUING of municipal debt and other types of municipal securities.
39
Explain the purpose of the OMITTING PROSPECTUS
an omitting prospectus omits MOST of the information an investor would NEED to make an investing decision.
Omitting prospectuses are NOT sufficient for soliciting a sale.
40
What is the PRIMARY DISCLOSURE DOCUMENT for a MUNICIPAL security?
is the OFFICIAL STATEMENT.
It contains much of the same sort of information you would find in a PROSPECTUS.
41
What will occur if a shareholder wishes to SEE an investment company's BALANCE SHEET?
An investment company must send a COPY of its balance sheet to any shareholder who requests one in WRITING between SEMIANNUAL reports.
42
An investor that buys a new security in the secondary market will be entitled to the final prospectus if the purchase occurs within the what TIMELINES?
■ For IPOs of NMS securities-25 days
■ For APOs of NMS securities—zero days (no requirement)
■ For IPOs of non-NMS securities-90 days
■ For APOs of non-NMS securities-40 days
43
What is the role of municipal advisors?
Municipal advisors work under a contract with the municipality to provide advice on issues such as debt structure, bond features, and other issues involved with raising capital. Municipal advisors may assist in some of the underwriting functions, such as preparing the official notice, but they may not be compensated as part of the underwriting (sale) of any issue they provide advice on.
44
What is the prospectus DELIVERY REQUIREMENTS after issuance?
any offering of a corporate security in a primary market transaction requires the DELIVERY OF A PROSPECTUS to the investors that purchase the security.
In addition to those investors that buy shares at the IPO (or APO), investors that purchase these shares in the SECONDARY market are also entitled to the FINAL prospectus if the purchase is made within a CERTAIN NUMBER of days of the release
45
Describe BEST EFFORTS UNDERWRITING
calls for the underwriters (syndicate) to BUY securities from the issuer acting simply as an AGENT, not as the PRINCIPAL.
This means that the underwriters ARE NOT committed to purchase the shares THEMSELVES and are therefore NOT at risk.
46
What are the TWO types of BEST EFFORTS UNDERWRITING?
■ All-or-none (AON)
| ■ Mini-max
47
Describe All-or-none (AON)
the ISSUING CORPORATION has determined that it WANTS AN AGREEMENT outlining that the UNDERWRITER must either SELL all the shares or CANCEL the underwriting.
Because of the UNCERTAINTY over the outcome of an AON offering, any funds collected from investors during the offering period must be held in ESCROW pending FINAL DISPOSITION of the underwriting.
48
The common term for the DISCLOSURE DOCUMENT for OTHER TYPES of EXEMPT securities is the ---------------, sometimes the term NOTICE OF SALE is used
offering circular
49
Who is a MANAGING UNDERWRITER?
One of the members of the SYNDICATE will take on a LEAD ROLE and provide SIGNIFICANT RESOURCES to the venture
50
What are SYNDICATES?
is a type of JOINT VENTURE where the BDs form up to SHARE both the RISK and the PROFITS from the offering.
51
Explain FIRM COMMITMENT UNDERWRITING
is a WIDELY USED type of UNDERWRITING CONTRACT.
Under its terms, the UNDERWRITERS contract with the ISSUER to BUY the securities.
The underwriter BUYS shares from the issuer and RESELLS the securities to the PUBLIC at a higher price—the POP—and earns this price DIFFERENTIAL (spread) for its efforts.
52
____________ in the PRIMARY MARKETS are those who are PURCHASING THE NEW ISSUE with the INTENT TO HOLD the security for a period of time.
Investors
53
What is Mini-max?
sets a floor or MINIMUM (the least amount the issuer NEEDS TO RAISE to move forward with the underwriting),
as well as a ceiling or MAXIMUM on the dollar amount of securities the issuer is WILLING TO SELL
The underwriter MUST LOCATE enough interested buyers to support the minimum (floor) issuance requirement.
54
What are the THREE TYPES of investor?
institutional
retail
accredited
55
INSTITUTIONAL investors can include
banks, insurance companies, pensions, hedge funds, investment advisers, and mutual funds
56
What is a RETAIL investor?
is investing his OWN assets.
Any investor that DOES NOT qualify as an INSTITUTION should be treated as a retail investor.
57
RETAIL INVESTORS who are ACCREDITED INVESTORS are
■ INSIDERS of the security's issuer (officers, board members, major stockholders) or
■ meet certain FINANCIAL criteria:
- An INCOME of at least $200,000 or more the past TWO years and expected to meet that criteria in the CURRENT year (if the purchase is in a JOINT NAME, this number is increased to $300,000)
- Or have a NET WORTH of $1,000,000 or more (NOT including EQUITY in the PRIMARY residence)
58
What is the ASSUMPTION for retail investors who are ACCREDITED?
is that the accredited investor will have a HIGHER SOPHISTICATION level than the average retail investor and does not need the same level of PROTECTION
59
What is the purpose of the Securities Act of 1933?
is to ensure that the investing public is fully informed about a security and its issuing company when the security is first sold in the primary market.
60
What GROUP OF INVESTORS are a part of the SECONDARY market?
RETAIL and INSTITUTIONAL investors are active participants in the secondary markets
61
______________________ are a SUBSET of investors made up of ALL institutional investors and CERTAIN retail investors
Accredited investors
62
What GROUP of investors are a part of the PRIMARY market?
the designation of ACCREDITED investor
63
What is an alternate name for the Securities Act of 1933?
also called the Paper Act
64
How does the Securities Act of 1933 protects investors who buy new issues ?
■ requiring REGISTRATION of new issues (unless exempt under the act);
■ requiring an issuer to provide full and fair DISCLOSURE about itself and the offering;
■ requiring an issuer to make available all material information necessary for an investor to JUDGE the issue's merit;
■ regulating the UNDERWRITING and DISTRIBUTION of primary issues; and
■ providing criminal penalties for FRAUD in the issuance of new securities.
65
What does the REGISTRATION STATEMENT entail?
The statement discloses MATERIAL INFORMATION about the issue.
Part of the registration statement is a disclosure document called a PROSPECTUS, which must be provided to all purchasers of the new issue.
66
What is an INSTITUTIONAL INVESTOR?
is an entity that POOLS MONEY to purchase securities and other investment assets.
Some institutional investors are called QUALIFIED INSTITUTIONAL BUYERS (QIBs).
This generally means that the QIB owns and invests a MINIMUM of $100 million in securities on a DISCRETIONARY BASIS.
67
When an issuer desires to SELL A SECURITY that DOES NOT MEET one of the EXEMPTIONS to registration under the 1933 Act, the issue must first be registered with the Securities and Exchange Commission (SEC).
What is the FIRST STEP in the process?
is for the ISSUER to file a REGISTRATION STATEMENT (called an S-1) with the SEC
68
What must the REGISTRATION STATEMENT contain?
■ a DESCRIPTION of the issuer's business;
■ the NAMES AND ADDRESSES of company officers and directors, their SALARIES, and a five-year business HISTORY of each;
■ the AMOUNT of corporate securities company officers and directors OWN and IDENTIFICATION of investors who own 10% or more of the company;
■ the company's CAPITALIZATION, including its equity and debt;
■ a description of how the PROCEEDS will be USED; and
■ whether the company is involved in any LEGAL PROCEEDINGS.
69
Describe the COOLING-OFF PERIOD
AFTER FILIING the registration statement, the cooling-off period BEGINS.
The cooling-off period lasts for a MINIMUM of 20 CALENDAR days, though the period is often LONGER.
if the SEC finds that the registration statement NEEDS REVISION or EXPANSION, the SEC may SUSPEND THE REVIEW and issue a DEFICIENCY LETTER to the ISSUER of the securities.
The 20-day cooling-off period would RESUME when the issuer submits a CORRECTED registration statement.
Note that it resumes where it had LEFT OFF and does not begin anew.
During the cooling-off period, no one can SOLICIT sales of the securities.
70
_____________ may ASSIST THE ISSUER in PREPARING AND FILING the registration statement and prospectus.
Underwriters (BDs and investment bankers)
71
Who is the primary federal regulator in the securities industry?
The Securities and Exchange Commission
72
What is ALLOWED during the COOLING OFF PERIOD?
The issuer may place a TOMBSTONE advertisement
preliminary prospectus delivered
indication of interest may be gathered
due diligence takes place
73
What are TOMBSTONE ADS?
are an ANNOUNCEMENT and DESCRIPTION of the securities TO BE OFFERED.
CERTAIN TYPES of advertisements relating to a NEW ISSUE are allowed to be run before the effective date.
74
What is the ADVISORY that MUST BE INCLUDED in all TOMBSTONE AD?
"This announcement is NEITHER an OFFER TO SELL nor a SOLICITATION of an offer for any of these securities.
This offer is made only by PROSPECTUS."
75
Seabird Airlines is SELLING shares to the public for the FIRST TIME.
The company intends to use the proceeds from the sale of its stock to purchase several new passenger aircraft.
This offering is an example of
A. a secondary offering.
B. a rights offering.
C. an initial public offering.
D. a subsequent primary offering.
C. an initial public offering.
76
The New Lumber Company's common stock is currently trading at S32 in the market.
Hew is preparing to SELL ADDITIONAL SHARES to raise money for a new mill.
This is an example of
A. a secondary offering.
B. a hybrid offering.
C. an initial public offering.
D. a subsequent primary offering.
D. a subsequent primary offering.
77
What is an ALTERNATE name for a PRELIMINARY PROSPECTUS?
red herring
78
True or False
| There is a FINAL PRICE in a PRELIMINARY PROSPECTUS
False
There is NO FINAL PRICE included in the preliminary prospectus, though a RANGE is often included.
79
What is an INDICATION OF INTEREST?
is an investor's DECLARATION of potential interest in PURCHASING some of the issue from the underwriter AFTER the security comes OUT OF REGISTRATION
80
What information is included in a tombstone ad?
■ NAME of the issuer
■ TYPE of security being offered
■ NUMBER of shares to be sold
■ Public offering PRICE (POP), or a range if the POP is not yet set
■ NAMES of the underwriting members (when placed by the underwriters instead of the issuer)
81
WHO is able to view the PRELIMINARY PROSPECTUS ?
the preliminary prospectus must be made available to ANY CUSTOMER who expresses interest in the securities during the COOLING-OFF PERIOD.
82
What is a PRELIMINARY PROSPECTUS?
can be used as a PROSPECTING tool, allowing issuers and underwriters to GUAGE investor INTEREST and gather INDICATIONS OF INTEREST.
83
During the COOLING-OFF PERIOD, an underwriter may do all of the following EXCEPT
A. gather binding indications of interest.
B. distribute red herrings to interested parties.
C. perform due diligence.
D. file required forms for state registration.
A. gather binding indications of interest.
—
They may, however do these:
B. distribute red herrings to interested parties.
C. perform due diligence.
D. file required forms for state registration.
84
Explain WHERE due diligence takes place
Underwriters and selling group members examine the issue to determine which customers the issue is SUITABLE for.
Often, the managing underwriter and the issuer will have due diligence MEETINGS to make a FORMAL PRESENTATIONS to those representatives that may offer the security to their customers.
85
The process of COORDINATING the federal and the state REGISTRATIONS is called
"blue sky"
86
WHO will receive the FINAL PROSPECTUS?
final prospectus is also available at RELEASE.
The final prospectus will be delivered to ALL WHO PURCHASE the new security at the IPO.
87
What is an investors INDICATION OF INTEREST?
is NOT a commitment to buy because sales are prohibited until AFTER the registration becomes EFFECTIVE (the effective date).
An indication of interest from an investor is NEITHER a COMMITMENT TO BUY from the investor nor a PROMISE TO SELL
by the underwriter
88
What does the FINAL PROSPECTUS include?
It will contain the SAME information as the PRELIMINARY prospectus plus TWO additional items:
the RELEASE DATE and the POP.
89
What is IPO?
When a corporation ISSUES STOCK TO SELL to the public for the FIRST time
90
What is RELEASE (or EFFECTIVE) DATE ?
Sometime ON OR AFTER (usually after) 20 days, the SEC will allow the security to be OFFERED TO INVESTORS.
91
What is a HYBRID offer?
When a corporation SELLS shares through a PRIMARY offering, it may allow some of the EXISTING SHAREHOLDERS to SELL their shares along with the NEW ISSUED SHARES.
Usually these are EARLY investors, founders, or key managers.
92
What is an ADDITIONAL PRIMARY OFFERING?
When a corporation issues stock to sell to the public for the first time.
If AFTER (usually YEARS after) the IPO, the corporation chooses to SELL MORE shares of the company
93
What is the PURPOSE of the SEC in terms of OFFERING FOR SALE?
The SEC does NOT approve or endorse any offering for sale;
the SEC simply CLEARS, or releases the offering for sale.
The standard SEC disclaimer reads as follows: 
`These securities have not been approved or disapproved by the SEC nor have any representations been made about the accuracy or the adequacy of the information."
94
If the ISSUER of the security is RECEIVING the funds from an offering, this is a _______ transaction.
Whether an IPO, APO, or something else, if the ISSUER is GETTING THE MONEY
primary market
95
What are the TWO SPECIAL TYPES of OFFERINGS that may appear on the test?
the SHELF OFFERING and the GREEN SHOE OFFERING
96
Describe a GREEN SHOE OPTION
allows the UNDERWRITERS to INCREASE the number of shares offered up to an ADDITIONAL 15% if there is sufficient DEMAND.
This is a FAIRLY COMMON for offerings where HEAVY DEMAND is expected.
97
For securities offered via a SHELF registration, a ______ MUST be filed with the SEC BEFORE each sale.
supplemental prospectus
98
What are NON-EXEMPT SECURITIES?
When securities are REQUIRED to be REGISTERED in order to be SOLD to the PUBLIC
99
Who are EXEMPT ISSUERS?
■ U.S. government securities;
■ municipal securities;
■ commercial paper, banker's acceptances, and other securities that have maturities of 270 days or less;
■ fixed life insurance policies (such as term or whole life) and fixed annuity contracts (but not variable annuities or variable life policies);
■ national and state bank (not bank holding company) securities;
■ building and loan and savings and loan (S&L) securities;
■ charitable, religious, educational, and nonprofit association securities; and
■ interests in common carriers (example: railroad equipment certificates).
100
What is SHELF OFFERING?
Through a shelf offering registration, an ISSUER who is ALREADY a publicly traded company can register NEW securities WITHOUT selling any of the shares until later or some of the shares initially, and waiting to sell the remaining portion of the shares.
101
Why would CERTAIN securities be EXEMPT from the REGISTRATION STATEMENT and PROSPECTUS requirements of the Securities Act of 1933?
either because of the issuer's level of CREDITWORTHINESS or because another government regulatory agency has JURISDICTION over the issuer
102
WHICH certain securities are EXEMPT from the registration statement and prospectus requirements of the Securities Act of 1933?
■ commercial paper, banker's acceptances, and other securities that have maturities of 270 days or less; and
■ insurance policies and fixed annuity contracts (but not variable annuities).
103
A copy of the final prospectus must precede or accompany all sales confirmations.
The prospectus must INCLUDE the
```
■ description of the offering;
■ offering price;
■ selling discounts;
■ offering date;
■ the use of the proceeds;
■ description of the underwriting, but not the actual contract;
■ statement of the possibility that the issue's price may be stabilized;
■ history of the business;
■ risks to the purchasers;
■ description of management;
■ material financial information;
■ legal opinion concerning the formation of the corporation; and
■ SEC disclaimer.
```
104
What are EXEMPT TRANSACTIONS?
Some securities are exempt from registration requirements due to the NATURE of the transaction.
Often these are SMALLER offerings or have RESTRICTIONS on WHO may invest
105
WHAT is Regulation A+ : small- and medium-sized offerings?
With the passage of the JOBs Act, a rule was put into place that would EASE the requirements for small- and medium-sized companies to RAISE CAPITAL.
106
What are examples of EXEMPT TRANSACTIONS?
Regulation A+: small- and medium-sized offerings
Rule 147: The Intrastate Offering Rule
Regulation D: Exempt Transactions (private placements)
General solicitations and advertising private placements
107
Describe Regulation A+:
small- and medium-sized offerings tier 1
Securities offerings up to $20 million in a 12-month period will be allowed.
Of the $20 million, NO MORE than $6 million can be sold on behalf of EXISTING selling shareholders.
The offering would be subject to a coordinated REVIEW by individual states and the SEC.
108
Who is offering available to in
Regulation A+:
small- and medium-sized offerings?
are open to the public, and general solicitation (advertising) is permitted for both tiers.
109
What is the PURPOSE of REGULATION A+?
provides two offering tiers for small- and medium-sized companies that will allow the companies to RAISE CAPITAL in amounts SUBSTANTIALLY MORE than the $5 million previously allowed under Regulation A.
110
What makes a tier 2 investor QUALIFIED in Regulation A+?
■ Be an ACCREDITED investor as defined in Rule 501 of Regulation D
■ LIMIT the investment to a maximum of the greater of 10% of the investor's NET WORTH or 10% of the investor's NET INCOME per offering.
111
Describe Regulation A+ tier 2
Securities offerings UP TO $50 million in a 12-month period will be allowed.
Of the $50 million, no more than $15 million can be SOLD ON BEHALF of EXISTING selling shareholders.
These offerings are subject to SEC review only and NONE at the state level.
112
In a Regulation A+ offering, the issuer files an abbreviated ___________ with the regional SEC office.
notice of sale, or offering circular,
Investors are provided with this offering circular rather than a full prospectus
113
What are the criteria's for companies to employ Rule 147?
■ It receives at least 80% of its INCOME in the state.
■ At least 80% of the issuer's ASSETS are located within the state.
■ At least 80% of the offering PROCEEDS are used within the state.
■ The majority of the company's EMPLOYEES must work in the state.
114
Describe Regulation D:
Exempt Transactions (private placements)
The SEC does NOT require registration of an offering under Regulation D so long as there are NO MORE THAN 35 NONACCREDITED investors.
There is NO LIMIT to the number of ACCREDITED investors that may invest in the private placement.
115
What is another name for PRIVATE PLACEMENT STOCK?
Lettered Stock
116
In Regulation D when ________________________________________________-; therefore, private placement stock is also called legend stock
the certificate may bear a legend indicating that it cannot be transferred without registration or exemption
117
True or False
| Securities sold under Rule 147 may NOT be REAOLD to nonresidents of the state for SIX months after the initial purchase.
True
118
Describe Rule 147:
The Intrastate Offering Rule
offerings that take place ENTIRELY in ONE state are EXEMPT from registration when the issuer has its PRINCIPAL OFFICE (headquarters) in the state and ALL purchasers are residents of the state.
119
Describe GENERAL SOLICITATIONS and ADVERTISING PLACEMENTS
In order to solicit or advertise private securities offerings (private placements), a business will need to meet certain requirements regarding the INTENDED INVESTORS.
