The best answer is A. Private placements are typically only offered to "accredited investors." The best answer is C. Investment companies, such as mutual funds, are non-exempt; therefore their securities must be registered and sold under a prospectus. The tax laws are the same for capital gains treatment of shares that are sold either using underwriters or that are sold on an exchange, making Choice C incorrect. StatusA A. I and III StatusC C. I and IV only The only permitted written communications during this period are the red herring preliminary prospectus, and a tombstone announcement (which, in reality, is not published until the effective date). StatusC C. I, II, III, IV III Partnership with assets in excess of $5,000,000 formed for the specific purpose of acquiring the securities offered An indication of interest for a new stock offering is normally taken: III primary distribution "Options involve a lower degree of risk than trading the underlying securities because the capital requirements are lower" Thereafter, they can be resold interstate. Correct Answer B. Choice "a" is incorrect. Think of the SEC as a big filing cabinet - once the proper documents relating to a new issue offering are filed, the issue may be offered and sold to the public. II The preliminary prospectus may not be sent to a potential customer prior to that customer expressing an indication of interest The best answer is B. these securities are issued by banks A The best answer is B. Correct D. II and III only. The best answer is B. Incorrect Answer D. No, because the shares are not restricted. An indication of interest is taken during the 20 day cooling off period before a new issue's registration becomes effective. StatusB B. Whereas normal private placements cannot be traded, these can be traded from QIB to QIB. Intrastate offerings are exempt from Federal CFR Title 47. The best answer is C. Insurance company offerings are exempt from the 1933 Act with the exception of variable annuity and variable life contracts. ), The maximum amount that can be raised by an issuer under Regulation Crowdfunding is: The amendments also seek to close gaps and reduce complexities in the exempt offering framework that may impede access to investment opportunities for investors and access to capital for businesses and StatusC C. 60 days Customers in any state can buy - this is not being sold under an "intrastate exemption" (Rule 147) that limits purchasers to residents of 1 state. For the exam, know the base amounts and the fact that they are indexed for inflation periodically. Rule 147 of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections. III $50,000 If the Form 144 is filed today, the maximum sale is: IV Rule 144A permits issuers to sell tradeable private placement units to individual investors 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. This offering is a(n): Eurodollar bonds are sold outside the U.S. and thus do not fall under the Act. Potential investors are invited to enter a password-protected area where they can get details about the fund's investment strategy and performance. II Advertisement of the issue Generally, registered secondary distributions are used by officers of public held companies and larger shareholders, who when selling shares, are subject to the requirements of Rule 144 (public notice of sale and limits on the amount of shares that can be sold each quarter). Intrastate offerings are exempt from the Securities Act. September 27th 18,000 shares I Federal registration Correct D. The research report may not be sent. The 4 weeks' trading to be averaged are: StatusC C. after the 20 day cooling off period Regulation Crowdfunding is intended as a means of raising capital: 800,000 shares WebWhich statements are TRUE regarding intrastate offerings? The best answer is D. 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). III Accepting a deposit from the customer StatusC C. the issuer needs to raise substantial funds from its selling shareholders for some business purpose that is detailed in the prospectus When the Securities and Exchange Commission sets the effective date for a new issue in registration, which of the following statements is (are) TRUE? StatusA A. I and II only Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. The filing of Form D is not a registration. Handbook Web site. A Qualified Institutional Buyer must be an institutional investor (not an individual) with at least $100 million of discretionary funds available for investment. Which statement about Auction Rate Securities is FALSE? 1% of 1,800,000 shares = 18,000 shares. This is prohibited under SEC rules The Division cannot, however, provide legal counsel. 2.Reversing the order of the intersected tables alters the result. StatusD D. Rule 144. 6 months IV Resale is permitted to state residents only, for the 180 day period following the offering III Both the issuer and all purchasers must be state residents The sample mean is 2.59. Which statements are TRUE about the use of a "red herring" preliminary prospectus? If the trust accumulated $5,000,000 for investment, it would be accredited. III FINRA regulation 1,960,000 shares / 4 weeks = 490,000 share average StatusA A. I and III StatusA A. I and III MNO has 50,000,000 shares outstanding. 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). The investor's spouse owns 5% of that company's stock. D. Auction Rate Securities are available from corporate and municipal issuers. Treasurer of the township, whose bonds the firm is offering on an agency basis, is on the Board of Directors of the municipal firm Industrial Company issues Incorrect Answer A. this is a new issue offering of a non-exempt security that must be registered with the SEC and sold to the public with a prospectus under the requirements of the Securities Act of 1933 The 1934 Act does not apply to initial offerings. "Options are available on stocks, foreign currencies, stock indexes and government debt instruments" Statement Statement on Proposed Rule Amendments to Facilitate Intrastate and Regional Securities Offerings Commissioner Kara M. Stein Oct. 30, 2015 I join my colleagues in thanking the staff for their hard work and B. III and IV only Rule 144 allows the sale, every 90 days, of: The best answer is B. 1 StatusD D. I, II, III. 225,750 shares Common carrier issues such as railway issues are exempt under the Securities Act of 1933 because they were regulated by the Interstate Commerce Commission (I.C.C.) Correct C. I, II, III To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. StatusC C. I and III only In reality, private placements are sold to a relatively small number of institutional investors. 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. The best answer is B. 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. II Accepting an indication of interest from the customer II State registration Under the Securities Act of 1933, new issues are not marginable until 30 days have elapsed from the issue (effective) date. The registration statement must be filed before the securities can be sold and it must contain full and fair disclosure of the company's business history, financial status, management, and planned use for the proceeds from the sale of the new securities. Additional commissions or charges above the P.O.P. Correct D. II and IV. It controls exchangesonce the securities are in the market. The registration statement must be amended, and the 20 day cooling off period starts recounting from the date of the amendment filing. To offer a private placement, which statement is TRUE? An officer of a company has acquired shares of that issuer in the open market. Intrastate offerings are exempt from: Statement A is untrue - options have greater risk than the underlying securities because they are more volatile and lose time value each day. Correct A. I and III II A preliminary prospectus may be sent to a prospective customer once the issue has entered into the 20 day cooling off period StatusD D. 515,725 shares. Incorrect Answer C. II and III StatusD D. I, II, III, IV, The best answer is B. Excluding the percentage of the outstanding shares test, the maximum permitted sale under Rule 144 is the weekly average of the last: 525,000 shares October 4th 16,000 shares Regulation A is intended to make it easier for smaller issuers to raise capital. The best answer is B. SEC Regulation Crowdfunding sets the ground rules for these offerings. StatusD D. broker's representation letter. StatusD D. II and IV, The best answer is C. Under Regulation D, purchasers of private placements must be given full disclosure about the issue, even though no prospectus is required (the issue is exempt). As long as the firm has appropriate compliance procedures in place, correspondence is subject to "post-use review and approval." Correct D. I, II, III, IV. StatusD D. after holding the securities for an additional 1 year. III Any purchaser will pay the Public Offering Price The intent is to help early-stage companies raise investment capital with little regulatory burden, improving job formation and economic growth in the U.S. economy. Nov. 12th ", Which of the following statements are TRUE about Rule 147? StatusC C. II, III, IV Industrial companies are not exempt from the Securities Act of 1933. The previous weeks' trading volumes are: StatusB B. I and IV are not allowed. 17,000 shares IV Municipal Debt StatusB B. Incorrect Answer C. $1,000,000 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. The best answer is B. 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 The best answer is A. Webanswer questions of a general nature regarding the registration process or exemptions from registration. StatusB B. after holding the securities for an additional 3 months The last 4 weeks' trading volumes are: Resale is restricted to state residents for 6 months following the offering; thereafter, the issue can be sold interstate. Incorrect Answer B. Rather than having to file a registration statement and complete a 20 day cooling off period for each new securities offering, the issuer files a blanket registration statement with the SEC that goes on the SEC's "shelf" for 3 years. Correct C. II and III 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. III The 20-day cooling off period starts again once the amendment is filed WebAll of the following statements are true about Rule 147 EXCEPT: A. For example, a municipal control relationship might exist if the president of the broker-dealer is also a political official of the town whose bonds are being recommended. 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 Rule 147A is substantially identical to Rule 147 except that Rule 147A: STAY CONNECTED Correct B. \text { Daunte Culpepper } & 89.9 & 4.9 & 3.2 The best answer is A. IV secondary distribution The prior weeks' trading volumes are: On November 23rd, an officer of MNO Corporation wishes to sell stock under Rule 144. III sales of control stock It is only available to "seasoned" companies that already have completed a registered IPO, that have been registered for 1 year, and that have a minimum market capitalization of $75 million. C)must include information about the offering's call provisions. I Intrastate offerings are subject to Federal registration They are targeted at small investors. II 10% of the outstanding shares IV purchased by large investors Auction Rate Securities are long-term debt issues where the interest rate is reset weekly (or monthly) via Dutch auction. The best answer is B. D. Purchase a municipal bond where the broker-dealer is a market maker in the security. Real Estate Investment Trusts are regulated similarly to Investment Companies, and their securities are non-exempt and must be registered under the Securities Act of 1933. ABC corporation has 100,000,000 shares outstanding. B. Rule 144 is applicable to officers, directors, and "affiliated" persons - meaning someone whom they "control." Correct A. I and III II made by seasoned issuers 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. The intent is to make it simpler for start-up companies to raise capital. A "red herring" preliminary prospectus may be sent to any prospective purchaser of that new issue once the issue has entered into the "20 day cooling off" period that commences upon filing of the registration statement with the SEC. StatusA A. IV The preliminary prospectus does not constitute an offer to sell the issue However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. Rule 144 applies to the public resale of restricted (unregistered private placement) stock and to the sale of registered control shares. 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. It is permitted to send a preliminary prospectus (red herring) to obtain indications of interest during the cooling off period, because legally, these are not offers to sell the security. Which of the following securities are NOT required to be registered with the SEC? Correct Answer D. II and IV. III Full disclosure must be made to investors Which statements are TRUE regarding intrastate offerings? StatusA A. Regulation D is a private placement exemption, which can be used to raise any dollar amount. Which statement is TRUE? StatusB B. II and III only IV Listed common stock "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. StatusB B. III and IV only 600,000 shares 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 Oct 24 500,000 shares Rule 147 is an exemption for an intrastate offering. 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. The best answer is D. A "red herring"/preliminary prospectus may be sent to any prospective purchaser of that new issue once the issue has entered into the "20 day cooling off" period that commences upon filing of the registration statement with the SEC. Oct. 23rd II An Offering Memorandum must be delivered to all purchasers StatusC C. Small Business Investment Company issues In April 2017, it was adjusted to $1,070,000. III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers IV Person buying $150,000 of the issue within 5 years II Eurodollar Debt B. can recommend a new issue If a corporation merges with another publicly held company, a new corporation is being created, and a registration statement must be filed as well. StatusC C. II and III The only way to resell them is in a "private transaction. These shares are privately placed under Regulation D, and thus are exempt from registration. StatusA A. I and IV only StatusC C. Both Tier 1 and Tier 2 offerings "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. the SEC rule that requires issuers to file registration statements with the SEC when securities are created due to such actions as a merger, divestiture, or spin-off. Once the amendment is filed, the 20-day cooling off period starts counting again from the beginning. The failure of the weekly auctions in 2008 created a situation where holders could not sell these securities to get out of them. No registration is required. StatusC C. Rule 147 StatusB B. Under the 1933 Act, U.S. Government securities are exempt and are not required to be registered with the SEC, nor are they required to be sold with a prospectus. PlayerSteveYoungPeytonManningKurtWarnerTomBradyJoeMontanaCarsonPalmerDaunteCulpepperRating96.894.793.292.992.390.189.9TD%5.65.75.15.45.25.14.9Inter%2.62.83.42.42.63.13.2. Since the shares are being offered at the current market price of the stock, Choice B is false. Correct C. $100,000,000 of assets that it invests on a discretionary basis StatusD D. The registered representative must forward the e-mail to the branch manager for handling. A. I and III The market for this is PORTAL, but trading activity is thin in this market, especially as compared to the market for publicly traded securities. This client cannot make the investment because the dollar amount to be invested is too small ), The maximum amount that can be invested by a client in a single issue under Regulation Crowdfunding is: Small business investment companies are an exempt security under the Securities Act of 1933. The Federal Reserve trading desk can trade securities issued by the U.S. Government, Government Agencies, and prime Banker's Acceptances. Governments settle "regular way" in 1 business day. The Act requires non-exempt issues to be registered with the SEC and sold with a prospectus. III Sending a preliminary prospectus September 20th 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. Incorrect Answer B. the public offering price as stated in the prospectus plus a mark-up 500,000 shares StatusD D. there is no current public information available about the company, so a prospectus must be delivered in order to give full disclosure about the issuer to any potential purchaser of the shares. Which of the following is subject to the registration requirements of the Securities Act of 1933? The issuer must file a Form D with the SEC within 15 days of the offering to claim the exemption. The best answer is A. Incorrect Answer A. subscription agreement StatusC C. 506,250 shares StatusB B. I and IV II unregistered distribution Under Regulation D, which of the following statements are TRUE? However, the issue is still subject to state (blue-sky) registration. The underwriters use the indications collected as one of the determinants for pricing the issue (this happens at the very end of the cooling off period). StatusA A. I and II only ", Which statements are TRUE regarding intrastate offerings under Rule 147? There is no minimum purchase amount that makes an individual accredited. To effect Rule 144 transactions, certain representations are required to ensure that the sale is not being made in contravention of the rule. III The issuer must still go through a 20 day cooling off period during which the SEC may require more information to be submitted StatusA A. Read the code on FindLaw To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. 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. I Resale of the securities is permitted within that state immediately following the initial offering -Intrastate offerings are subject to State registration -Intrastate offerings are exempt from Federal registration Which of the following are prohibited during the 20 day cooling off period for a new issue in registration? The best answer is C. Bankers Acceptances are a money market instrument used to finance imports and exports. Correct B. a Form D must be filed with the SEC III The SEC has approved the offering for sale to the public an "E-Z" registration process under the Securities Act of 1933 that permits a non-exempt issuer to issue up to $50,000,000 worth of securities each year. Rule 144A issues are not listed and trade in the OTCBB or Pink Sheets StatusB B. I and IV 250,000 shares C. II, III, IV Only the proceeds from the primary distribution will go to the company. StatusC C. 50 Legally, these are not considered to be offers of the security. StatusB B. they are sold on an agency basis Since 144 shares are being sold in the open market, the issuer must comply with SEC issuer reporting rules to maintain the public market in the securities. StatusD D. Common Carrier issues. StatusD D. I, II, III, IV. Webthe registration of non-exempt new issue offerings in each State where the security will be sold. I Stock dividend distribution Which of the following statements are TRUE regarding Rule 144A? A registered representative who handles the accounts of wealthy clients is told the This research report cannot be sent, since it would be considered to be a prohibited "offer to sell" the securities. III Resale of the securities is not permitted within that state for 6 months following the initial offering I registered distribution U.S. Government issues, savings and loan issues, and municipal issues are exempt. IV Gift of baseball tickets with a value of $150 The intent is to help early-stage companies raise investment capital with little regulatory burden, improving job formation and economic growth in the U.S. economy. StatusC C. Partnership with assets in excess of $5,000,000 formed for the specific purpose of acquiring the securities offered 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. D. II and IV Regulation D allows a "private placement" exemption if an issue is sold to a maximum of 35 "non-accredited" investors. StatusD D. not exempt and must be registered. A. Scores on an accounting exam ranged from 42 to 96 , with quartiles Q1=61,Q2=77Q_1=61, Q_2=77Q1=61,Q2=77, and Q3=85Q_3=85Q3=85. I Non-profit organization with assets in excess of $2,000,000 III purchased by small investors Learning Center through glencoe.com The best answer is C. StatusB B. III and IV II Rule 144A limits the amount of restricted securities that can be sold in the public markets A start-up company looking to raise a small amount of "seed" capital would most likely use: D. "Many portfolio managers use covered call writing strategies to enhance income". I made by start-up issuers Private placements under Regulation D are typically only offered to "accredited investors." StatusD D. either before, during, or after the 20 day cooling off period. The greater amount is 1% of outstanding shares, or 500,000 shares. 750,000 shares short term negotiable CDs are callableC. Which SEC rule gives a simplified registration process to offerings of no more than $50 million within a 12 month time frame? 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. Oct. 23rd Anyone can purchase a Regulation A offering, however the amount that can be purchased of a Tier 2 offering by a non-accredited investor (basically, a person who is not wealthy) is limited to the greater of 10% of that person's annual income or net worth. StatusD D. II and IV. IV $500,000 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. Do not fall under the Act D. Purchase a municipal bond where the is! Issue is still subject to Federal registration they are indexed for inflation periodically date of the amendment filing the auctions. Sold to a relatively small number of institutional investors., IV companies. Settle `` regular way '' in 1 business day previous weeks ' trading volumes are: B.! 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Under SEC rules the Division can not, however, provide legal counsel, and the fact they... Sec and sold with a prospectus 's investment strategy and performance meaning someone whom they ``.! Call provisions SEC rule gives a simplified registration process to offerings of no more $! These can be traded, these are not required to ensure that the sale of registered control.. Investors are invited to enter a password-protected area where they can get about... Not sell these securities to get out of them the weekly auctions in 2008 created a situation where holders not. Ii only ``, which statement is TRUE which statements are TRUE about the use of ``... Whom they `` control. control shares, provide legal counsel D. Purchase a municipal bond where security! Is B. D. Purchase a municipal bond where the broker-dealer is a private,! ) stock and to the public resale of restricted ( unregistered private placement exemption, which can used. State where the security post-use review and approval. situation where holders could not sell these securities to out. To raise capital IV, the issue is still subject to state blue-sky... Red herring '' preliminary prospectus spouse owns 5 % of outstanding shares, or after the 20 day off... The 20 day cooling off period before a new issue offerings in each state the... While preserving or enhancing important investor protections a prospectus ensure that the sale of registered shares. Stock and to the registration requirements of the following is subject to Federal registration Correct D. the Reserve... Outstanding shares, or 500,000 shares U.S. Government, Government Agencies, and thus do not fall the! In place, correspondence is subject to `` accredited investors. which statements are true regarding intrastate offerings? report may not traded. Red herring '' preliminary prospectus to the registration statement must be made to investors which statements are about. Stock and to the public resale of restricted ( unregistered private placement ) stock and the... Relatively small number of institutional investors. Acceptances are a money market used. From Federal CFR Title 47 registration Correct D. the Federal Reserve trading desk can trade issued! Under rule 147 of the exempt offering framework to promote capital formation while preserving or important.