Correct B. StatusD D. I, II, III, IV. Industrial companies are not exempt from the Securities Act of 1933. 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. trading occurs in the secondary marketD. \text { Carson Palmer } & 90.1 & 5.1 & 3.1 \\ Tier 1 offerings, up to a maximum amount of $20 million, are given the easiest registration method and do not require audited financial statements. (see Non-exempt security, Prospectus). Correct C. $100,000,000 of assets that it invests on a discretionary basis Incorrect Answer A. StatusA A. This offering is a(n): 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"). Excluding the percentage of the outstanding shares test, the maximum permitted sale under Rule 144 is the weekly average of the last: D. II and IV. a private placement investor under Regulation D who is not wealthy enough to be "accredited." III primary distribution A security which was never registered and can only be sold in the public markets when it is either registered, or sold under an exemption provision The MSRB has no regulatory authority over limited partnerships. Rule 144 allows the sale, every 90 days, of the greater of 1% of the outstanding shares of that company; or the weekly average of the prior 4 week's trading volume. StatusC C. 1 year 250,000 shares Finally, the broker must represent that it did not solicit the transaction and that it acted as agent in executing the transaction. StatusA A. I and III The VC funding will be given preferred stock with warrants, or convertible debt that the company has to E-mails can contain recommendations of securities; but they cannot recommend new issues (unless the e-mail also contained a copy of the prospectus). a one-page report about this area of Section 3(a)(11) of the Securities Act is generally known as the intrastate offering exemption. This exemption seeks to facilitate the financing of local business operations. StatusC C. II and III Private placements are typically only offered to "accredited investors." Incorrect Answer C. 12 months It is permitted to distribute a red herring preliminary prospectus; to take non-binding indications of interest; and to publish an tombstone announcement. Correct Answer A. I and III Once the registration statement is filed, the issue enters the 20-day cooling off period. 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. Posted Date :-2022-03 StatusD D. 280,000 shares. Correct Answer A. Correct B. I Stock dividend distribution I This is a primary distribution of 500,000 shares The best answer is B. The best answer is B. StatusB B. II and III only Second, the Act expands Michigans intrastate offering rule (MUSA 202 (1) (n)) to allow offers and sales to 50 Michigan residents (up from 25 Michigan residents under the old law). September 6th 17,000 shares III FINRA regulation IV Gift of baseball tickets with a value of $150 Correct A. Thus, a corporation distributing a stock dividend or splitting its stock would not require a registration statement filing. B. 525,000 shares I Fixed annuity contracts 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 September 27th 18,000 shares Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person 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). Business entertainment is permitted as long as it is not too excessive or too frequent and it must comply with the firm's policies and procedures. 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. Since this is the first issue of these securities, this is a primary distribution. ADRs are the way that most foreign corporate issues trade in the United States. II. The best answer is D. Since this issue is "in registration," it is in the 20-day cooling off period. Which of the following securities is NOT exempt from the Securities Act of 1933? StatusA A. the maximum offering amount permitted under the rule is $50,000,000 within a 12 month period II Accepting an indication of interest from the customer The Securities Exchange Act of 1934 regulates intrastate stock offerings made by a company. These do not have to complete the 6 month holding period requirement because they are registered, but to sell them, the officer must file a Form 144 Notice of Sale and is subject to the rule's volume restrictions. Trades of U.S. 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. 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. Restricted securities can be sold under Rule 144 if all of the following conditions are met EXCEPT: Rule 144A 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. I Real Estate Investment Trusts (a) Sketch a simple boxplot ( 5 number summary without fences) using a nicely scaled XXX-axis. A sample of 65 observations is selected from one population with a population standard deviation of 0.75. After holding them for 3 months fully paid, the President wishes to sell the shares. 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. IV Listed common stock StatusD D. broker's representation letter. StatusD D. II and IV. \text { Daunte Culpepper } & 89.9 & 4.9 & 3.2 All of the following are required to sell "144" stock EXCEPT: I. Intrastate offerings are subject to Federal registration. Thus, a fixed annuity offered by an insurance company is exempt from the 1933 Act. Regulation D allows a "private placement" exemption if an issue is sold to a maximum of 35 "non-accredited" investors. $500,000 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. 2 years The best answer is C. ADRs (American Depositary Receipts) are non-exempt securities and must be registered with the SEC under the Securities Act of 1933. 500,000 shares Regulation D $1,000,000 of assets that it invests on a discretionary basis The best answer is A. StatusD D. II and IV. StatusA A. I and III An investor wishes to sell restricted stock under the provisions of Rule 144. B. I and IV Since Commercial Paper is an exempt security under the Securities Act of 1933, it may be sold without a prospectus. IV Up to 6 sales per year are allowed 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 client cannot make the investment unless he or she is an accredited investor II Rule 144A limits the amount of restricted securities that can be sold in the public markets WebIntrastate securities offerings are exempt from the registration requirements of the Securities Act of 1933. Correct A. StatusB B. I and IV G. Federal Rule 147 Intrastate Offerings persons11 with access to the information that would be included in a registration statement. 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. Which of the following are non-exempt issues under the Securities Act of 1933? StatusD D. A security which is purchased by an issuer that is not exempt from the provisions of the Securities Acts. StatusA A. I and II only But the rule disallows this if the trust is formed for the purpose of buying the private placement! Click on the OOH StatusB B. In addition, the terms of the offering must be filed with FINRA and must comply with FINRA rules. III Person with a net worth of $1,000,000 exclusive of residence 600,000 shares \text { Tom Brady } & 92.9 & 5.4 & 2.4 \\ StatusA A. I and II only acronym for a "Qualified Institutional Buyer" as defined under Rule 144A. I by the seller of the restricted shares Correct C. 18,250 shares Which statement is TRUE? Whereas normal private placements cannot be traded, these can be traded from QIB to QIB. September 27th 200,000 shares II A preliminary prospectus may be sent to a prospective customer once the issue has entered into the 20 day cooling off period III Foreign Government Debt under Regulation D, a purchaser of a private placement who has a net worth of at least $1,000,000; or an annual income of at least $200,000 for the past two years (or a couple with joint annual income of $300,000); or an officer of director of the issuer; or is an institution, such as a pension fund or insurance company. 3,000,000 shares / 4 weeks = 750,000 share average Tier 2 offerings allow a maximum of $50 million to be raised, but require audited financial statements. Correct Answer A. Correct B. I, III, IV 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. A. must be reviewed and approved in advance by a principal 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. StatusD D. not exempt and must be registered. II Couple earning $300,000 per year StatusC C. issuer's representation letter 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"). 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. Regulation A is intended to make it easier for smaller issuers to raise capital. For the exam, know the base amount and the fact that it is indexed for inflation periodically. 2 weeks' trading volume The Form 144 is filed on Monday, September 28th. September 20th The red herring is used to obtain non-binding indications of interest in the issue, and may be sent to anyone during the cooling off period, whether or not that person has previously expressed any interest in the issue. C. I and III only 12 months Which statements are TRUE? 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. StatusA A. I only 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. C. II, III, IV Which of the following is an exempt security under the Securities Act of 1933? It could do this by making purchases of that issue in its discretionary accounts. To effect Rule 144 transactions, certain representations are required to ensure that the sale is not being made in contravention of the rule. StatusA A. before the 20 day cooling off period The best answer is B. Incorrect Answer C. $1,000,000 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. III 10 business days prior of the placement of the order The failure of the weekly auctions in 2008 created a situation where holders could not sell these securities to get out of them. Which statement is true regarding the INTERSECT operator? The weekly average of the preceding 4 weeks' trading volume is: III The issuer must still go through a 20 day cooling off period during which the SEC may require more information to be submitted IV secondary distribution Correct Answer D. II and IV. Rule 144A allows qualified institutional buyers ("QIBs") to buy and trade between themselves large blocks of privately placed issues. The maximum permitted sale amount is: 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. IV Accepting a firm order from the customer The sale of Direct Participation Programs is regulated by all of the following EXCEPT: Choice "a" is incorrect. The focus of the rule is to require that there be current public information regarding a company. The Securities Act of 1933 regulates the subsequent public trading of StatusB B. hypothecation agreement The idea here is that people could attempt to get around the 35 non-accredited investor limit by having these non-accredited investors contribute to a trust that would buy the issue. Business entertainment does not fall under the $100 gift limit. ", Which statements are TRUE regarding intrastate offerings under Rule 147? The intent is to make it simpler for start-up companies to raise capital. StatusC C. II and III StatusB B. These are wealthy individuals and institutional investors. StatusD D. This is permitted without restriction. Resale is restricted to state residents for 6 months following the offering; thereafter, the issue can be sold interstate. 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 C. There is no restriction on resales within that state. StatusB B. The only way to resell them is in a "private transaction. The previous weeks' trading volumes are: 35 II Solicitations of orders StatusA A. I and III To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. 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 D. Purchase a municipal bond where the broker-dealer is a market maker in the security. StatusB B. II and IV All of the following are exempt issues under the Securities Act of 1933 EXCEPT: The best answer is C. 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. Which of the following actions on the part of a corporation would require registration statement filing with the SEC under Rule 145? III Recommending the purchase of the issue The greater amount is 1% of outstanding shares, or 1,000,000 shares. StatusC C. II or III, whichever is greater This client cannot make the investment because the dollar amount to be invested is too small IV secondary distribution The Act requires non-exempt issues to be registered with the SEC and sold with a prospectus. StatusD D. I, II, III, IV. WebAll of the following statements regarding short term negotiable certificates of deposit are correct EXCEPT: A. the minimum denomination is $100,000B. The investor's spouse owns 5% of that company's stock. the effective date of the issue is unaffected by the deficiency notice An SEC "deficiency letter" indicates that there is not adequate disclosure in the registration documents to allow investor "Options involve a lower degree of risk than trading the underlying securities because the capital requirements are lower" The best answer is C. Under Regulation D regarding private placements, how many non-accredited investors are allowed to invest in the offering? B)is also called a prospectus. StatusB B. after holding the securities for 90 days Correct B. during the 20 day cooling off period The best answer is B. WebWhich statements are TRUE regarding intrastate offerings? H0:12;H1:1>2H_0:_1_2; H_1:_1>_2 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. Which SEC rule gives a simplified registration process to offerings of no more than $50 million within a 12 month time frame? September 20th 20,000 shares D. I, II, III, IV. If any of the securities are offered or sold to even one out-of-state person, the exemption may be lost. The best answer is B. III Any purchaser will pay the Public Offering Price Correct Answer A. I or III, whichever is greater Once the amendment is filed, the 20-day cooling off period starts counting again from the beginning. Rule 147A is a new intrastate offering exemption adopted by the Commission in October 2016. II Eurodollar Debt I made by start-up issuers 6LinkedIn 8 Email Updates, Compliance Guide: Intrastate Offering Exemptions (Rules 147 and 147A), Press Release: SEC Adopts Final Rules to Facilitate Intrastate and Regional Securities Offerings, Staff Guidance: Rule 147 Compliance and Disclosure Interpretations (Section141). Webwhich statement is true regarding intrastate offerings rule 147 offering rule 147a rule 147 requirements (1) NGICE Bonds Secured by a Letter of Credit .to the exemption for Incorrect Answer D. No, because the shares are not restricted. Which of the following are exempt securities under Securities Act of 1933? Which statement is TRUE? 600,000 shares They are targeted at small investors. Note, however, the restricted securities may always be sold in a so-called "private transaction" - these are not considered to be public offers of that restricted security. Assuming that all other requirements of the rule are met, the maximum sale amount is: StatusA A. Non-profit organization with assets in excess of $2,000,000 The announcement appears in the Wall Street Journal. 2.Reversing the order of the intersected tables alters the result. 2 years II The proper documents for registration have been filed with the SEC 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. (see Regulation D), Which of the following are accredited investors? The interest rate on an Auction Rate Security is reset weekly or monthly Regulations: Securities Act of '33 Review Que, Regulations: Other Federal and State Regulati, Regulations: Securities Exchange Act of 1934, Financial Profile / Retirement & Education Sa, Anderson's Business Law and the Legal Environment, Comprehensive Volume, David Twomey, Marianne Jennings, Stephanie Greene. Incorrect Answer A. SEC has approved the offering for sale to the public Thus, the registration for the issue may never "go effective. III Gift of $150 cash Restricted stock is stock which was never registered and cannot be sold in the public markets unless registration takes place or an exemption (such as Rule 144) is available. StatusD D. I, II, III, IV, Which of the following statements are TRUE regarding Rule 144A? Which of the following are exempt issues under the Securities Act of 1933? MNO has 50,000,000 shares outstanding. Incorrect Answer D. Regulation D. The best answer is A. StatusC C. Yes, because she has not held the shares for 6 months 400,000 shares Correct D. None of the above. A maximum of 35 non-accredited investors are permitted in a private placement for the transaction to be exempt under the Securities Act of 1933. The best answer is C. To be accredited, an individual must have an annual income of $200,000 per year; or a couple must have an annual income of $300,000 per year; or the purchaser must have a net worth of at least $1,000,000, exclusive of residence. A. municipal broker-dealer always makes a market in the municipality's securities that are being recommended However, Tier 2 offerings (up to $50 million) are subject to purchase limitations only for non-accredited purchasers. The Securities Act of 1933 The "idea" is that if a large block of stock were dumped into the open market by a selling shareholder, it could hammer the market price of the shares. these securities are issued by banks A The best answer is B. Private placements under Regulation D are typically only offered to "accredited investors." III A registered representative gives a customer $200 tickets to a show 1 Twitter 2 Facebook 3RSS 4YouTube IV Resale of the securities is not permitted outside that state for 6 months following the initial offering It controls exchangesonce the securities are in the market. This registration statement is good for: StatusC C. Regulation A Thus, issuers can sell private placements to these QIBs, who can then trade the private placement issues among themselves. Incorrect Answer B. Which statement describes trading of Rule 144A issues? 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 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). The bank that structures the ADRs handles the registration. A customer that regularly purchases new common stock issues from her broker-dealer sends an e-mail to her registered representative asking that all prospectuses be forwarded to her electronically at her e-mail address. If the Form 144 is filed today, the maximum sale is: 73,000 shares / 4 = 18,250 shares StatusC C. after holding the securities for an additional 6 months Learning Center through glencoe.com The Federal Government only has jurisdiction over interstate offerings. StatusA A. An indication of interest for a new stock offering is normally taken: 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. I The rule exempts intrastate issues from Federal registration Which statement is TRUE regarding Commercial Paper? Correct Answer C. the stock must be held for 6 months, fully paid IV Publishing a tombstone announcement Rule 144 B. II they are sold on an agency basis FINRA regulates the sale of limited partnerships. Anyone can purchase a Regulation A offering - it is not limited solely to accredited (wealthy) investors. II Resale of the securities is permitted outside that state immediately following the initial offering StatusB B. I and IV 35 Q U.S. Government issues, savings and loan issues, and municipal issues are exempt. WebAll of the following statements are true about Rule 147 EXCEPT: A. Note that there is no similar limitation on Tier 1 purchases. State the decision rule. Rule 144 allows the sale, every 90 days, of: Which statements are TRUE regarding intrastate offerings? The best answer is A. $500,000 IV $500,000 \text { Kurt Warner } & 93.2 & 5.1 & 3.4 \\ II Stock split C. I and IV Securities that are sold under a Rule 147 exemption (intrastate exemption) canno Governments settle "regular way" in 1 business day. StatusD D. II and IV. StatusA A. Which of the following statements are TRUE regarding the preliminary prospectus? StatusD D. I, II, III, IV. 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. I A registered representative accepts a $300 gift from a customer C. Purchase a municipal bond where the broker-dealer has a control relationship with the issuer In April 2017, it was adjusted to $2,200. How can an investor resell non-restricted securities? Tier 2 offerings short term negotiable CDs are callableC. 500,000 shares Correct Answer A. State Blue Sky Laws The issue can be sold to an unlimited number of "accredited" (wealthy and institutional) investors under this exemption and still be considered a private placement. Since the offering can only be made through a prospectus, it is an offering that is registered with the SEC. Incorrect Answer B. the public offering price as stated in the prospectus plus a mark-up No, because the shares are being sold under a "de minimis" exemption (see Cooling off period), If the SEC sends a deficiency letter to the issuer regarding an issue in registration, which of the following statements are TRUE? StatusD D. II and IV. StatusA A. I and IV only An investor that has been unaffiliated with the issuer for at least 3 months is permitted to sell restricted shares under Rule 144 without being subject to the volume restrictions, after having held the shares for: Do not confuse Rule 144A with Rule 144, which covers the sale of "restricted" and "control" stock in the open market. This market is not available to individuals. StatusB B. 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. IV The SEC can issue subsequent deficiency letters after amendments are reviewed StatusA A. Correct B. The 4 weeks' trading to be averaged are: IV Intrastate offerings are exempt from State registration StatusA A. I and III Disclosure is accomplished by providing the purchaser with a copy of an "Offering Circular," which for smaller private placements is called the "Offering Memorandum.". 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. I Federal registration Industrial Company issues \end{array} StatusD D. I, II, III, IV. Which of the following is subject to the registration requirements of the Securities Act of 1933? Correct Answer B. the amount of stock held by the selling shareholders was restricted and was too large an amount to sell under the provisions of Rule 144 The last 4 weeks' trading volumes are: IV Resale is permitted to state residents only, for the 180 day period following the offering III FINRA regulation Correct B. III and IV only No specific authorization is needed to buy securities for a discretionary customer account where the firm is a market maker in the security - no control relationship exists with the issuer in this case. 490,000 shares The best answer is B. Which of the following is defined as an "accredited investor" under Regulation D? 485,000 shares It simply notifies the SEC that the issue is being offered in compliance with the exemption. StatusA A. I and III Webanswer questions of a general nature regarding the registration process or exemptions from registration. For the exam, know the base amount and the fact that it is indexed for inflation periodically.
