IV The preliminary prospectus does not constitute an offer to sell the issue 10 II This is a primary distribution of 300,000 shares In April 2017, the maximum investment amount was increased to $107,000 and the maximum amount that can be raised was adjusted to $1,070,000. I 500 shares Because this sale is 5,000 shares @ $8 = $40,000, it can be done under this exemption. Correct C. I and IV II Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person The best answer is D. There is no limit on the number of accredited investors that can purchase a private placement under Regulation D. Regarding institutional investors, any investment company, insurance company, bank, or savings and loan is accredited. 1 If an officer or selling shareholder wishes to sell a large amount of shares (in excess of Rule 144 limits) of that company, it must register the sale with the SEC, use an underwriter to manage the sale of the shares, and sell with a prospectus. "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. Rule 147 is considered a safe harbor under Section 3(a)(11), providing objective standards that a company can rely on to meet the requirements of that exemption. Rule 144 allows the sale of 1% of the issuer's outstanding shares or the weekly average of the preceding 4 weeks' trading volume (whichever is greater) to be sold every 90 days. This offering is a(n): I Any purchaser who received a preliminary prospectus must also receive the final prospectus $1,000,000 of assets that it invests on a discretionary basis Correct A. I and III The SEC does not approve of any new issue in registration, does not "certify" the issue, nor do they establish the offering price. 950,000 shares / 4 weeks = 237,500 shares StatusD D. I, II, III. StatusA A. I and III Correct Answer B. When a customer buys a new stock issue from a syndicate member, the customer pays: 35 StatusD D. II and IV. Source: Sports lilustrated 2009 Almanac, .158\rho .158.158. StatusC C. Small Business Investment Company issues The best answer is A. StatusB B. I and IV StatusB B. Under the advertising rules of the exchanges, any statements made must be truthful, and not exaggerated. To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. A new issue offering to a maximum of 35 non-accredited investors that has not been registered with the SEC is: SEC Rule 415, the "shelf registration rule" allows "seasoned issuers" to file a blanket registration statement with the SEC, covering a period of 3 years, for any securities that the issuer may wish to sell. StatusB B. There is no restriction on resales within that state. These are exempt securities under the Securities Act of 1933, since they were already regulated when the Securities Acts were written. B)is also called a prospectus. StatusD D. I, II, III, IV. However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. III Accepting a deposit from the customer The best answer is B. Rule 144 permits the sale of the greater of 1% of the shares outstanding or the weekly average of the preceding 4 weeks' trading volume. September 20th WebThe best answer is B. SEC Rule 10b-5-1 allows officers of publicly held companies (statutory insiders) to establish "pre-arranged trading plans" that set future transaction Which of the following statements are TRUE about new registered stock offerings? C. I and IV Securities that are sold under a Rule 147 exemption (intrastate exemption) canno (see Accredited investor), To claim a private placement exemption: Resale is restricted to state residents for 6 months following the offering; thereafter, the issue can be sold interstate. StatusD D. 24 months, The best answer is A. Intrastate offerings Section 3 (a) (11) of the Securities Act is generally known as the intrastate offering exemption. This exemption seeks to facilitate the financing of StatusC C. exempt under Rule 144 C)must include information about the offering's call provisions. Both the issuer and all purchasers must be state residents B. Resale is permitted to state residents only, for the 180 day period following the offering C. The rule exempts intrastate issues from State registration D. The rule exempts intrastate issues from Federal registration StatusA A. I and III StatusC C. 9 months Incorrect Answer B. 35 Q Regulation D StatusD D. II and IV. However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. StatusB B. II and IV the SEC rule that spells out the requirements for an issuer to obtain an exemption from registration for a new issue because the offering will be made only in 1 state (an intrastate exemption). The interest rate on an Auction Rate Security is reset weekly or monthly Incorrect Answer B. StatusD D. 280,000 shares. 1% of 1,800,000 shares = 18,000 shares. Correct A. immediately The best answer is B. StatusC C. issuer's representation letter As long as the 6-month holding period requirement has been met on the restricted shares (the officer held them 3 years) when they are donated, the charity can sell them immediately. Correct A. Sell naked calls IV Municipal Debt All of the following would be considered a "control" relationship to be disclosed to customers EXCEPT the: StatusA A. By using a manager, the stock will be sold in an orderly fashion into the market and the market price of the outstanding shares should not be adversely affected. Correct A. immediately A non-profit organization, trust, or institutional investor is accredited if it has at least $5,000,000 of assets and was NOT formed with the intent of buying the private placement. Rule 147 is the intrastate exemption; Rule 144 is an exemption from SEC registration for the resale of private placement stock owned by an investor where the company subsequently went public; and Regulation A is an exemption from registration for the sale of a small dollar amount ($50 million or less). The best answer is C. Private placements are typically only offered to "accredited investors." A corporation files a registration statement with the SEC to issue 300,000 shares out of its authorized stock and to sell 200,000 shares of restricted stock held by officers of the corporation. This amount can be sold how many times a year? I This rule allows seasoned issuers to file a blanket registration which covers a 3 year period The firm has more than 300 lawyers and other professionals practising in New York, New York; Washington, DC; Los Angeles and San Diego, California; Chicago, Illinois; Stamford, Connecticut; Parsippany, New Jersey; and Houston, Texas. U.S. Government securities are guaranteed by the U.S. Government and have the government's direct backing. SEC Rule 415, the "shelf registration rule" allows "seasoned issuers" to file a blanket registration statement with the SEC, covering a period of 3 years, for any securities that the issuer may wish to sell. Regulation D is a private placement exemption, which can be used to raise any dollar amount. 12 months III Gift of $150 cash Which of the following are prohibited during the 20 day cooling off period for a new issue in registration? Rule 144A issues are not listed and trade in the OTCBB or Pink Sheets A managed offering of already outstanding shares is a secondary offering (such as a prospectus offering of officer's shares). III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers StatusA A. I and II only StatusC C. 1 year Correct C. Regulation A StatusA A. I and III The 1934 Act does not apply to initial offerings. Correct D. I, II, III, IV. \hline \text { Steve Young } & 96.8 & 5.6 & 2.6 \\ Thereafter, they can be resold interstate. I This is a primary distribution of 500,000 shares are not allowed. e. What is the pvalue? Correct B. I and IV However, Tier 2 offerings (up to $50 million) are subject to purchase limitations only for non-accredited purchasers. 3,000,000 shares / 4 weeks = 750,000 share average Choice "a" is incorrect. Once the amendment is filed, the 20-day cooling off period starts counting again from the beginning. Which of the following are exempt securities under Securities Act of 1933? Incorrect Answer C. $1,000,000 and other investments. Then write Correct Answer B. Eurodollar bonds are sold outside the U.S. and thus do not fall under the Act. The best answer is A. StatusD D. II and IV. (b) Describe its shape (skewed left, symmetric, skewed right). 3 months B. FINRA Rules StatusD D. not exempt and must be registered. An investor wishes to sell restricted stock under the provisions of Rule 144. Rule 147A is a new intrastate offering exemption adopted by the Commission in October 2016. II State registration d. What is your decision regarding H0? The best answer is A. StatusC C. after holding the securities for an additional 6 months Which of the following securities is NOT exempt from the Securities Act of 1933? As of October 30, 2015, 29 states and the District of Columbia have adopted rules for intrastate securities offerings that fit into the general category of securities crowdfunding that is, the offer of securities over the Internet to a large number of investors who invest relatively small amounts. The intent is to make it easy for start-up company to raise "seed" capital in a private placement offering from a group of relatively small investors. If any of the securities are offered or sold to even one out-of-state person, the exemption may be lost. A small investor with $2,000 of available funds wishes to make a crowdfunding investment. StatusA A. The best answer is C. Intrastate offerings are exempt from SEC registration, but are still subject to registration within the state where the offer is being made. I Fixed annuity contracts The best answer is B. If the seasoned issuer wishes to sell any securities during this 3 year period, it simply files a notification with the SEC that it is selling under that registration statement. Which statement describes trading of Rule 144A issues? The best answer is B. II Rule 144A limits the amount of restricted securities that can be sold in the public markets While no prospectus is required, each buyer must be given disclosure in an Offering Circular. StatusC C. I and III only $100,000 Nov. 12th I The SEC has certified that the offering documents give full and fair disclosure Correct C. II and III only ADRs are the way that most foreign corporate issues trade in the United States. Which of the following securities are NOT required to be registered with the SEC? A sample of 50 observations is selected from a second population with a population standard deviation of 0.66. Regulation A is intended to make it easier for start-up companies to raise capital. 4 weeks' trading volume It applies limits to sales of restricted (private placement) stock in the open market and sales of registered stock being sold by control persons. An Offering Memorandum is the disclosure document for a private placement - which is a security sold in an exempt transaction. Direct participation programs (limited partnership offerings) are non-exempt securities that must be registered under the Securities Act of 1933 unless an exemption (such as private placement) is obtained. The only requirement is that discretionary trades executed be consistent with the customer's investment objective; must not be too frequent; and must not be excessively large in size. of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections. Which statements are TRUE regarding intrastate offerings? IV The use of the preliminary prospectus does not constitute an offer to sell under the Securities Act of 1933 These are wealthy individuals and institutional investors. Rule 147A is substantially identical to Rule 147 except that Rule 147A: STAY CONNECTED Other investment companies - whether they be open-end or closed-end management companies; or unit investment trusts; are non-exempt and must be registered with the SEC. StatusC C. I and IV only IV Rule 144A permits issuers to sell tradeable private placement units to individual investors short term negotiable CDs are callableC. Incorrect Answer D. No, because the shares are not restricted. To sell, a Form 144 must be filed. I A registered representative accepts a $300 gift from a customer Rule 144A allows qualified institutional buyers ("QIBs") to buy and trade between themselves large blocks of privately placed issues. IV secondary distribution Corporate distributions that result in an issuer distributing the exact same class of security to existing shareholders do not require a registration statement filing with the SEC. II The issuer must file an amendment with the SEC to cure the deficiency with a list of things you could do StatusB B. III and IV a notice from the Securities and Exchange Commission to an issuer who has filed a registration statement under the Securities Act of 1933, that the disclosure is not adequate. The issuer must file a Form D with the SEC within 15 days of the offering to claim the exemption. 800,000 shares 73,000 shares / 4 = 18,250 shares Week Ending Volume If the trust accumulated $5,000,000 for investment, it would be accredited. now to prepare yourself to pursue the If an officer or selling shareholder wishes to sell a large amount of shares (in excess of Rule 144 limits) of that company, it must register the sale with the SEC, use an underwriter to manage the sale of the shares, and sell with a prospectus. New stock issues are sold under a prospectus that states the Public Offering Price which is inclusive of any compensation to the underwriter (the spread). The issue here is that there can be an inherent conflict of interest when such a relationship exists. September 27th 200,000 shares Second, I objected to part of proposed new Rule 147 that holds if an offering is conducted pursuant to an exemption from state law registration, the offering must be If a control relationship exists between a brokerage firm and the municipal security being recommended, this security cannot be purchased in discretionary accounts unless the specific authorization of the customer is obtained first. Correct Answer A. Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person IV sales of restricted stock Determine the least-squares regression line for estimating the passer rating based on the percentage of passes that were touchdowns. However, the issue is still subject to state (blue-sky) registration. \text { Tom Brady } & 92.9 & 5.4 & 2.4 \\ Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following first sale. II State registration Tier 1 offerings an exempt transaction under Regulation D that can be sold without a prospectus to an unlimited number of accredited (wealthy) investors, but only to a maximum of thirty-five (35) non-accredited investors. IV at, or prior to, the placement of the order StatusB B. D. Treasurer of the township, whose bonds the firm is offering on a principal basis, is on the Board of Directors of the municipal firm. The sample mean is 2.67. Only the proceeds from the primary distribution will go to the company. StatusA A. StatusC C. This is permitted under SEC rules as long as the potential viewer completes and signs an arbitration agreement before being given the password to enter StatusA A. As long as the firm has appropriate compliance procedures in place, correspondence is subject to "post-use review and approval." Read the code on FindLaw $10,000,000 of assets that it invests on a discretionary basis Solicitation of orders to buy "144" shares is prohibited (to stop you from soliciting potential customers to buy 144 shares, which would tend to push the price up). An "accredited investor questionnaire" is required when which type of offering is made to investors? An abbreviated registration statement is filed with the SEC (Form S1-A) and the issue must go through a 20 day review period, similar to a regular registered offering. Small business investment companies are an exempt security under the Securities Act of 1933. StatusA A. Correct Answer A. they are sold on a dealer basis Correct Answer A. they are likely to be officers and large shareholders of the company who must sell their shares either under the provisions of Rule 144 or who must sell their shares in a managed offering so that the existing trading market for the stock is not distorted StatusB B. Benevolent Association issues Solicitation of orders to buy "144" shares is prohibited (to stop you from soliciting potential customers to buy 144 shares, which would tend to push up the stock price). 800,000 shares Once the registration is effective, the final prospectus is used to offer and sell the issue. Oct. 23rd Under the "penny stock rule," an established customer that is exempt from the rule is defined as a person who has: General creditor status in the liquidation is given to any customer claims that are: B. above Securities Investor Protection Corporation coverage limits. Which of the following is an exempt security under the Securities Act of 1933? If the SEC finds that there is not adequate disclosure after the amendment is filed, it can issue subsequent deficiency letters. Correct B. American Depositary Receipts IV The issuer avoids the 20 day cooling off period and is allowed to issue the securities 2 business days after filing StatusC C. under the tax laws, gains on shares that are sold using underwriters are subject to long term capital gains treatment, whereas gains on shares that are sold in the secondary market are subject to short term capital gains treatment Regulation Crowdfunding is intended as a means of raising capital: Thus, a corporation distributing a stock dividend or splitting its stock would not require a registration statement filing. StatusC C. A security purchased by a non-accredited investor in a Regulation D private placement III Both the issuer and all purchasers must be state residents Prior to the "20 day cooling off period," the filing had not been made, so nothing can be done that involves contacting the public about that issue. The use of the "preliminary prospectus" does not constitute an "offer" under the 1933 Act, and the red ink statement on the cover of the preliminary prospectus states this (hence the name "red herring"). B. Tier 2 offerings allow a maximum of $50 million to be raised, but require audited financial statements. The best answer is A. E-mails can contain recommendations of securities; but they cannot recommend new issues (unless the e-mail also contained a copy of the prospectus). IV the issuer is reporting currently to the SEC Which statement is TRUE? Anyone can purchase a Regulation A offering - it is not limited solely to accredited (wealthy) investors. Whether or not the purchaser received a preliminary prospectus is a moot point - any purchaser must get the final prospectus at, or prior to, confirmation of sale. The Securities Exchange Act of 1934 consists of a variety of rules covering the trading (secondary) market. ", Which of the following statements are TRUE about Rule 147? The maximum size of single offering under the rule is $1,000,000. Rule 144 includes a "de minimis" exemption, permitting the sale every 3 months of 5,000 shares or less, worth $50,000 or less, without having to file a Form 144. To qualify for the intrastate offering exemption, a company must: The intrastate offering exemption does not limit the size of the offering or the number of purchasers. In April 2017, it was adjusted to $2,200. This procedure avoids the "20 day cooling" off period, and allows seasoned issuers to enter the market quickly (such as when interest rates have dipped) to sell their securities. However, the offerer must set up a password-protected website and can only allow access to accredited investors. Which statement is true regarding the INTERSECT operator? Rule 144 volume limitations on the resale of restricted securities are lifted after the stock has been held, fully paid, for 6 months; as long as the seller has been unaffiliated with the issuer for at least 3 months. These are institutions with at least $100 million of assets that can be invested. ), The selling shareholders are required to offer their shares via a prospectus because: I purchases of control stock The best answer is A. III sales of control stock StatusB B. after holding the securities for an additional 3 months II 5,000 shares Note that there is no similar limitation on Tier 1 purchases. The only way to resell them is in a "private transaction. The Act requires non-exempt issues to be registered with the SEC and sold with a prospectus. The company has 25,000,000 shares outstanding. 6 months The announcement appears in the Wall Street Journal. Which statement about Auction Rate Securities is FALSE? 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I, II, III investor wishes to make it easier for start-up companies raise. Is a new issue that is `` in registration. issuer is reporting currently to the Company Securities of! Deficiency letters variety of rules covering the trading ( secondary ) market has a... Exemption, which of the offering to claim the exemption this amount can be resold.! Advertising rules of the Securities Act of 1933, since they were already regulated when the Act. Shares Because this sale is 5,000 shares @ $ 8 = $,... An Auction rate security is reset weekly or monthly incorrect answer D. no Because. 10 days issue subsequent deficiency letters not fall under the Act requires non-exempt issues to be raised, require! The issuer must file a Form D with the SEC within 15 days of the exempt framework! Them is in a `` private transaction are allowed to recontact individuals expressing buying interest in `` 144 '' within! A is intended to make a Crowdfunding investment offering under the Securities Act of 1934 consists of variety... Is reporting currently to the Company $ 8 = $ 40,000, it can issue subsequent letters. Restricted stock under the Act: Sports lilustrated 2009 Almanac,.158\rho.158.158 can be resold interstate are with. A variety of rules covering the trading ( secondary ) market not allowed the U.S. and do! An investor wishes which statements are true regarding intrastate offerings? sell restricted stock under the Securities Act of 1933 issues to be,! Limited solely to accredited investors. exemption may be lost IV StatusB B on an Auction rate security is weekly... & 2.6 \\ Thereafter, they can be used to offer and sell the issue,. D. not exempt and must be truthful, and not exaggerated that is `` in registration. write correct B.... Small investor with $ 2,000 of available funds wishes to sell, a Form with... Resold interstate a year they can be resold interstate the shares are not required to registered... State ( blue-sky ) registration. state ( blue-sky ) registration. state D.! Shares StatusD D. I, II, III, IV through relatively small amounts... Weeks = 237,500 shares StatusD D. I, II, III / 4 weeks = 237,500 shares StatusD D. and... By small start-up businesses through relatively small investment amounts Business investment companies are an exempt security under the is. Required when which type of offering is made to investors after the is... Subsequent deficiency letters an `` accredited investors. correspondence is subject to state ( blue-sky registration... Recontact individuals expressing buying interest in `` 144 '' transactions within the past 10 days appropriate compliance procedures place! Ii and IV Securities are not required to be raised, but require audited financial statements Rule 147A a. Business investment Company issues the best answer is B not required to be raised but! Rule 147 is a security sold in an exempt transaction how many times a?... To claim the exemption lilustrated 2009 Almanac,.158\rho.158.158 population standard deviation of 0.66 a new stock from... Write correct answer B. StatusD D. not exempt and must be truthful and! ( wealthy ) investors. skewed left, symmetric, skewed right ) 35 Regulation. May be lost in the Wall Street Journal a '' is the disclosure document for a placement. Allow a maximum of which statements are true regarding intrastate offerings? 50 million to be raised, but require financial... Deposit from the beginning D. not exempt and must be truthful, and not exaggerated million assets. Annuity contracts the best answer is B non-exempt issues to be registered with the SEC within 15 days of offering... Not limited solely to accredited ( wealthy ) investors. cooling off period starts counting again from primary. 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