There are no purchase limitations on Tier 1 (up to $20 million) Regulation A offerings. Correct Answer C. II and III 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. II A registered representative pays for a $300 meal with a customer 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. Rule 144 does not apply to stock purchases - it only applies to stock sales. Which of the following is defined as an "accredited investor" under Regulation D? B. III and IV only B. A. I and II only The 1934 Act does not apply to initial offerings. 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. 1% of 1,800,000 shares = 18,000 shares. U.S. Government securities are guaranteed by the U.S. Government and have the government's direct backing. If the Form 144 had been filed the preceding week, the maximum permitted sale is: IV with a less-rigorous registration process with the SEC StatusC C. II and III StatusB B. III and IV only StatusD D. each sale is limited to the greater of 1% of the outstanding shares; or the weekly average of the prior 4 weeks' trading volume. Small business investment companies are an exempt security under the Securities Act of 1933. StatusD D. I, II, III, IV. The best answer is A. I Resale of the securities is permitted within that state immediately following the initial offering The weekly average of the preceding 4 weeks' trading volume is: A. must be reviewed and approved in advance by a principal Correct D. The research report may not be sent. II Resale of the securities is permitted outside that state immediately following the initial offering StatusA A. The best answer is C. Rule 144 requires that restricted securities be sold on an agency basis only. The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. This offering is a(n): The best answer is C. I Sale of the issue A. The Official Statement is the disclosure document for municipal bonds (which are an exempt issue). The best answer is A. StatusD D. II and IV. StatusD D. Foreign Government Debt. Additional commissions or charges above the P.O.P. The Form must be filed by the seller at, or prior to, with the placement of the sell order. securities issued by railroads, airlines, trucking companies that are subject to regulation by the ICC - Interstate Commerce Commission (now part of the Department of Transportation). 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). 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. 250,000 shares 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. For the exam, know the base amount and the fact that it is indexed for inflation periodically. II Eurodollar Debt -Intrastate offerings are subject to State registration -Intrastate offerings are exempt from Federal registration these securities are issued by banks A The best answer is B. ", Which statements are TRUE regarding intrastate offerings under Rule 147? 6 months A. 10 Incorrect Answer C. II and III Correct B. III and IV only Conclude your report However, the offerer must set up a password-protected website and can only allow access to accredited investors. IV The SEC can issue subsequent deficiency letters after amendments are reviewed I Stock dividend distribution Once the registration is effective, the final prospectus is used to offer and sell the issue. 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. Which SEC rule gives a simplified registration process to offerings of no more than $50 million within a 12 month time frame? 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. An investor owns 20% of the outstanding shares of ABC Corporation, a publicly traded company. In April 2017, they were adjusted to $2,200 and $1,070,000 respectively. 500,000 shares 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. Correct C. sales are limited to purchasers who are "resident" in the state where the issuer resides Tier 1 offerings, up to a maximum amount of $20 million, are given the easiest registration method and do not require audited financial statements. Correct B. I and IV StatusA A. A registered representative has prepared a research report about a new issue that is "in registration." There is no restriction on resales within that state. Which of the following are prohibited during the 20 day cooling off period for a new issue in registration? StatusB B. StatusC C. 50 State Blue Sky Laws StatusA A. The only way to resell them is in a "private transaction. $100,000 September 6th Correct Answer B. StatusA A. I and III Correct B. I, II, III It gives an "E-Z" registration method for offerings of up to $50 million within a 12 month period. ", Under Rule 147, intrastate offerings cannot be resold out of state for how long after the initial sale date? III The SEC has approved the offering for sale to the public An indication of interest for a new stock offering is normally taken: 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 II Rule 144A limits the amount of restricted securities that can be sold in the public markets StatusC C. 60 days It could do this by making purchases of that issue in its discretionary accounts. Industrial Company issues StatusC C. I, II, III, IV The company has 1,800,000 shares outstanding. $1,000,000 of assets that it invests on a discretionary basis StatusB B. I and IV Correct A. StatusB B. after holding the securities for an additional 3 months 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. The best answer is C. Rule 144A issues are private placement securities sold in minimum $500,000 blocks only to QIBs - Qualified Institutional Buyers (institutions with at least $100MM of assets available for investment). Legally, these are not considered to be offers of the security. ADRs are the way that most foreign corporate issues trade in the United States. Is this a one-tailed or a two-tailed test? Week Ending Volume However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. are not allowed. I This is a primary distribution of 500,000 shares Most of the registration statement is a copy of the Prospectus to be given to investors. The best answer is D. Prior to the filing of a registration statement for a new issue, nothing can be done. ABC corporation has 100,000,000 shares outstanding. StatusC C. II and III IV Rule 144A permits issuers to sell tradeable private placement units to individual investors Source: Sports lilustrated 2009 Almanac, .158\rho .158.158. The filing of Form D is not a registration. 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 A. for a link to the Occupational Outlook 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. StatusD D. $5,000,000, The best answer is C. The maximum amount that can be raised in a single offering under Regulation Crowdfunding is $1,000,000. 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. StatusD D. $5,000,000, The best answer is A. The greater amount is 1% of outstanding shares, or 250,000 shares. (see Accredited investor), To claim a private placement exemption: StatusC C. Yes, because she has not held the shares for 6 months The best answer is A. StatusA A. This offering is a(n): Which of the following statements are TRUE regarding Rule 144A? I purchases of control stock StatusA A. I and III The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. The best answer is A. 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. StatusD D. Neither Tier 1 nor Tier 2 offerings. Excluding the percentage of the outstanding shares test, the maximum permitted sale under Rule 144 is the weekly average of the last: 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). Correct Answer C. II, III, IV The Securities Exchange Act of 1934 consists of a variety of rules covering the trading (secondary) market. II The preliminary prospectus may not be sent to a potential customer prior to that customer expressing an indication of interest I Disclosure in the registration documents is not complete Correct Answer A. I and III Which statement about Auction Rate Securities is FALSE? Rule 147 the disclosure document that must be filed with the SEC under the Securities Act of 1933 by all companies planning to offer non-exempt securities to the public. Correct B. II only 3 months Once the "shelf" filing is made, by giving 2 days' notice to the SEC, the issuer can sell new securities in the market. 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. Any control relationship, wherein a person at the municipal securities firm is in a position to influence a municipal issuer whose securities are being traded by that firm, must be disclosed. II Gift of baseball tickets with a value of $75 III purchased by small investors 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. 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. Which of the following statements are TRUE regarding Rule 415? "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. StatusC C. exempt under Rule 144 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 best answer is C. Investment companies, such as mutual funds, are non-exempt; therefore their securities must be registered and sold under a prospectus. Correct A. immediately Correct C. 18,250 shares 450,000 shares Conduct the following test of hypothesis using the .08 significance level.a. The best answer is B. ADRs (American Depositary Receipts) are non-exempt securities and must be registered with the SEC under the Securities Act of 1933. StatusD D. II and IV. This is a new issue with all of the proceeds from this offering going to the company, therefore it is a primary distribution. 220,000 shares The Form 144 is filed on Monday, September 28th. StatusB B. after holding the securities for 90 days The greater amount is 1% of outstanding shares, or 500,000 shares. 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). 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