StatusD D. broker's representation letter. 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. A. I and II only Thereafter, they can be resold interstate. The best answer is B. II An Offering Memorandum must be delivered to all purchasers It requires the registration of broker-dealers and self-regulatory organizations (the exchanges). StatusB B. hypothecation agreement E-mails to customers can be sent from a registered representative's branch office (but they cannot be sent from a registered representative's home). 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. The best answer is B. "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. Correct D. II and III only. The registration statement must be amended, and the 20 day cooling off period starts recounting from the date of the amendment filing. The maximum permitted sale amount is: StatusD D. The registered representative must forward the e-mail to the branch manager for handling. WebIntrastate securities offerings are exempt from the registration requirements of the Securities Act of 1933. I Resale of the securities is permitted within that state immediately following the initial offering StatusD D. 1 year. The best answer is B. Business entertainment does not fall under the $100 gift limit. Rule 144 Correct A. I and III Which of the following are defined as "accredited investors" under Regulation D? ", Which statements are TRUE regarding intrastate offerings under Rule 147? StatusA A. I and II only 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.) StatusC C. I, II, III, IV StatusC C. 50 (see Regulation D), Which of the following are accredited investors? Correct B. The Securities Exchange Act of 1934 consists of a variety of rules covering the trading (secondary) market. StatusD D. Rule 144A issues cannot be traded in the public markets. On November 23rd, an officer of MNO Corporation wishes to sell stock under Rule 144. Regarding individual investors, either a minimum income ($200,000 for an individual or $300,000 for a married couple) or net worth test ($1,000,000 net worth) must be met to be accredited. Restricted stock is best described by which of the following? 18,000 shares StatusC C. I, II, and IV Thus, while the issue is in registration, the issue cannot be offered, sold, advertised, or recommended, and orders to buy the issue cannot be solicited. State the decision rule. StatusA A. I and IV only 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. StatusC C. II and III 220,000 shares An investor wishes to sell restricted stock under the provisions of Rule 144. The research report may be sent to any customer expressing an "indication of interest" U.S. Government issues, savings and loan issues, and municipal issues are exempt. III Accepting a deposit from the customer Correct Answer D. II and IV. StatusA A. III Foreign Government Debt StatusA A. StatusC C. 1 year StatusB B. they are sold on an agency basis StatusC C. Rule 147 No specific authorization is required to sell naked or covered calls in discretionary accounts. StatusA A. StatusC C. 3 IV Person buying $150,000 of the issue within 5 years The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. III Resale of the securities is not permitted within that state for 6 months following the initial offering Which of the following statements are TRUE regarding Rule 144A? I A Prospectus must be delivered to all purchasers 225,750 shares September 13th 19,000 shares "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. Since this customer made the request by e-mail, we know that the customer has internet access and the firm can follow the customer's instructions. 2 years Intrastate offerings are exempt from the Securities Act. If the officer wishes to sell the shares, the officer must meet all of the following requirements EXCEPT: StatusA A. Corporate bonds are non-exempt securities that must be registered with the SEC under the Securities Act of 1933. If the SEC sets the "effective date" for an issue in registration, this means that all proper documents have been filed with the SEC. III The SEC has approved the offering for sale to the public Q2. Correct D. 4. Rule 144 allows the sale of the greater of 1% of the outstanding shares or the weekly average of the preceding 4 weeks trading volume every 90 days. A. municipal broker-dealer always makes a market in the municipality's securities that are being recommended Correct D. None of the above. The 6-month holding period is required for restricted stock, but not for control stock. II The rule exempts intrastate issues from State registration StatusD D. any price since this is a negotiated market offering. b. The issuer must represent that the corporation is current with all required SEC filings because it is prohibited to use Rule 144 to sell if this is not the case. Because this sale is 5,000 shares @ $8 = $40,000, it can be done under this exemption. Choice "b" is incorrect. StatusD D. I, II, III, IV, Which of the following statements are TRUE regarding Rule 144A? Correct A. I and III A sample of 65 observations is selected from one population with a population standard deviation of 0.75. Once the registration is effective, orders can be accepted if customers receive the final prospectus, at or prior to, confirmation of sale. Correct A. I and III StatusD D. 1,025,000 shares. StatusB B. II and IV StatusA A. before the 20 day cooling off period Intrastate Crowdfunding The Act makes crowdfunding legal in Michigan. Oct. 30th III Sending a preliminary prospectus StatusD D. II or IV, whichever is greater. Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person StatusD D. no filing is required with the SEC. Correct B. exempt under Regulation D C. I and IV Securities that are sold under a Rule 147 exemption (intrastate exemption) canno StatusD D. I, II, III, IV. e. What is the pvalue? 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. IV Gift of baseball tickets with a value of $150 Correct A. I and III Correct Answer C. II, III, IV Correct C. $100,000,000 of assets that it invests on a discretionary basis Oct. 23rd They are targeted at small investors. 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). Control shares are registered shares owned by a key officer or director. 12 months StatusB B. II only Which of the following statements are TRUE about new registered stock offerings? The intent is to make it simpler for start-up companies to raise capital. A seller who has filed Form 144 can sell 1% of the outstanding shares or the weekly average of the last 4 weeks' trading volume whichever is greater. $10,000,000 of assets that it invests on a discretionary basis Press Release: SEC Proposes Rule Changes to Harmonize, Simplify and Improve the Exempt Offering Framework, Press Release: SEC Seeks Public Comment on Ways to Harmonize Private Securities Offering Exemptions, be organized in the state where it is offering the securities, carry out a significant amount of its business in that stateand, make offers and sales only to residents of that state, the company must be organized in the state where it offers and sells securities, the company must have its principal place of business in-state and satisfy at least one doing business requirement that demonstrates the in-state nature of the companys business, offers and sales of securities can only be made to in-state residents or persons who the company reasonably believes are in-state residentsand, the company obtains a written representation from each purchaser providing the residency of that purchaser, allows offers to be accessible to out-of-state residents, so long as sales are only made to in-state residentsand, permits a company to be incorporated or organized out-of-state, so long as the company has its principal place of business in-state and satisfies at least one doing business requirement that demonstrates the in-state nature of the companys business. 200,000 shares Nov 21 The best answer is B. Correct D. I, II, III, IV, The best answer is D. An SEC "deficiency letter" indicates that there is not adequate disclosure in the registration documents to allow investors to make an informed decision. StatusB B. after holding the securities for an additional 3 months A. The best answer is C. "Control stock," which is registered stock of a company bought in the open market by an officer or director of that company, is subject to all Rule 144 requirements when the officer or director wishes to sell, except for the 6-month holding period. WebWhich of the following statements is true? This company is already publicly traded, therefore it is filing its financial information with the SEC, which makes the information available to the public, making Choice D incorrect. Thus, issuers can sell private placements to these QIBs, who can then trade the private placement issues among themselves. c. Compute the value of the test statistic. III Partnership with assets in excess of $5,000,000 formed for the specific purpose of acquiring the securities offered 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. Which SEC rule gives a simplified registration process to offerings of no more than $50 million within a 12 month time frame? IV Publishing a tombstone announcement StatusD D. effective cost to potential purchasers has been established by the SEC. Which statements are TRUE about the use of a "red herring" preliminary prospectus? A. I and II only StatusB B. I and IV A company has filed a registration statement with the SEC that uses a method that is only available to seasoned issuers. The best answer is D. Since this issue is "in registration," it is in the 20-day cooling off period. Which of the following are exempt issues under the Securities Act of 1933? II for established companies This offering is a(n): 1.It ignores NULL values. The best answer is B. October 4th 16,000 shares stock, usually issued directly to the officers or directors of a corporation in a private placement, that has not been registered with the SEC. D. can recommend stocks. StatusD D. I, II, III, IV. Correct B. StatusA A. StatusD D. II and IV. StatusD D. II and IV. The 1934 Act does not apply to initial offerings. III the weekly average of the prior 4 weeks' trading volume 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. The 6-month holding period is required for restricted stock, but not for control stock. The best answer is D. 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. 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. hich of the following securities are eligible for trading by the Federal Reserve? ), Crowdfunding offerings are typically: A security of an issuer which has been bought in the open market by an officer or director of that company StatusD D. Regulation D. The best answer is C. StatusA A. I and II Which statements are TRUE regarding intrastate offerings? \hline \text { Steve Young } & 96.8 & 5.6 & 2.6 \\ Which statement is TRUE regarding Commercial Paper? Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. 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. II and IV only The best answer is C. Bankers Acceptances are a money market instrument used to finance imports and exports. 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. StatusB B. an offer of securities that is made only in one state (as opposed to an interstate offer made in more than 1 state) that is an exempt transaction under the Securities Act of 1933, since the Federal government does not have jurisdiction unless the transaction crosses state lines. The Official Statement is the disclosure document for municipal bonds (which are an exempt issue). StatusD D. II and IV. The best answer is A. IV Resale of the securities is not permitted outside that state for 6 months following the initial offering II Rule 144A limits the amount of restricted securities that can be sold in the public markets 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. Incorrect Answer B. by using an underwriter, the selling shareholders can offer their shares to the public at a premium to the current market price of the stock and maximize their potential profit on the sale \end{array} ", Which of the following activities are allowed once a registration statement for a new issue is filed with the SEC? Rule 144 applies to the public resale of restricted (unregistered private placement) stock and to the sale of registered control shares. Incorrect Answer B. StatusB B. The only way to resell them is in a "private transaction.". Tier 2 offerings allow a maximum of $50 million to be raised, but require audited financial statements. 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. Regulation D allows a "private placement" exemption if an issue is sold to a maximum of 35 "non-accredited" investors. Incorrect Answer A. SEC has approved the offering for sale to the public The interest rate on an Auction Rate Security is reset weekly or monthly 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"). The registered representative can follow the customer's instructions by forwarding the request to the member firm's operations department A. StatusB B. II and IV The best answer is B. Rule 147A is substantially identical to Rule 147 except that Rule 147A: STAY CONNECTED Correct C. 18,250 shares II 5,000 shares StatusD D. I, II, III. The rule is split into Tier 1 and Tier 2. II 10% of the outstanding shares If the Form 144 is filed today, the maximum sale is: StatusC C. exempt under Rule 144 job category securities, commodities, StatusC C. II, III, IV The effective date occurs once the 20-day cooling off period has elapsed without a deficiency notice being sent by the SEC to the issuer of the securities. II Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person Which offering of securities under Regulation A is subject to purchase limitations? The best answer is C. StatusA A. I and II only An unaffiliated investor wishes to sell a large amount of "144" shares. I Stock dividend distribution StatusA A. I and III StatusA A. These are private placement securities that are exempt from registration with the SEC. B. III and IV only 2 years Correct D. II and IV. StatusD D. 280,000 shares. Private placements are exempt transactions under the Securities Act of 1933. Rule 144 applies to: A spouse is considered an affiliated person. The best answer is B. FINRA regulates the sale of limited partnerships. Without the exemption, the company would be in violation of the Securities Act if the offering does not qualify for another exemption. 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. The best answer is C. Form 144 does not have to be filed to sell restricted or control stock if 5,000 shares or less, worth $50,000 or less, is sold during each 90 day period. III Proceeds from the sale of 500,000 shares will go to the company III primary distribution 6 months a one-page report about this area of 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). C. II, III, IV I A preliminary prospectus may be sent to a prospective customer before the issue has entered into the 20 day cooling off period are not allowed. A registered representative who handles the accounts of wealthy clients is told the The best answer is C. Insurance company offerings are exempt from the 1933 Act with the exception of variable annuity and variable life contracts. 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 Securities Act of 1933 is primarily concerned with registration of:: The best answer is C. The Securities Act of 1933 requires that new issues that are not exempt from the Act be registered with the SEC. The sample mean is 2.67. Incorrect Answer B. I or IV, whichever is greater before the Act was written; and Congress did not want to subject them to "double" regulation. StatusC C. 8 weeks' trading volume Incorrect Answer B. the public offering price as stated in the prospectus plus a mark-up If the Form 144 was filed the preceding week, then the week ending November 12th would not yet have occurred. IV U.S. Government Bond Funds 500,000 shares However, unlike a variable rate demand note (VRDO), they have no embedded put option - meaning that the issuer is not obligated to buy them back at the reset date. Since this is the first issue of these securities, this is a primary distribution. Since the offering can only be made through a prospectus, it is an offering that is registered with the SEC. 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). (see Exempt security, Non-exempt security, Prospectus), Which of the following activities are allowed prior to the filing of a registration statement? StatusA A. 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. 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). The only way to resell them is in a "private transaction. 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which statements are true regarding intrastate offerings?