The 4 weeks' trading to be averaged are: StatusB B. I and IV Rule 144 applies to: IV No disclosure is required to investors "Options are available on stocks, foreign currencies, stock indexes and government debt instruments" However, the issue is still subject to state (blue-sky) registration. Disclosure is accomplished by providing the purchaser with a copy of an "Offering Circular," which for smaller private placements is called the "Offering Memorandum.". Since this is the first issue of these securities, this is a primary distribution. Non-accredited investors buying a Tier 2 Regulation A offering cannot invest an amount that is the greater of 10% of that person's annual income or net worth. What are the problems with intrastate offerings that the SEC is trying to solve? ABC corporation has 100,000,000 shares outstanding. 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. C. can be sent from the branch office where the representative works StatusA A. ADRs are the way that most foreign corporate issues trade in the United States. These are wealthy individuals and institutional investors. C. MSRB Rules D)can be used to review the issue's creditworthiness. C. Auction Rate Securities can be put back to the issuer at the reset date Correct B. II only Thus, issuers have a way of selling securities to these investors quickly without incurring the costs of SEC registration; and the QIB knows that it can always sell that investment to another QIB without needing to register the issue with the SEC. Choice "a" is incorrect. StatusD D. II and IV. The best answer is A. 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. Correct D. I, II, III, IV. The best answer is A. September 27th 18,000 shares Regulation A is intended to make it easier for start-up companies to raise capital. are not allowed. D. II and IV The bank that structures the ADRs handles the registration. StatusD D. arbitration agreement. Rule 144 is applicable to officers, directors, and "affiliated" persons - meaning someone whom they "control." The greater amount is 1% of outstanding shares, or 1,000,000 shares. Thus, issuers can sell private placements to these QIBs, who can then trade the private placement issues among themselves. Week Ending Volume Oct 31 Rule 144 490,000 shares 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. WebAll of the following statements are true about Rule 147 EXCEPT: A. The investor's spouse owns 5% of that company's stock. job category securities, commodities, 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. Rule 144A Resale is restricted to state residents for 6 months following the offering; thereafter, the issue can be sold interstate. The best answer is D. Prior to the filing of a registration statement for a new issue, nothing can be done. 450,000 shares III the weekly average of the prior 4 weeks' trading volume The previous weeks' trading volumes are: StatusC C. I, II, and IV 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. StatusA A. 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. III The issuer must still go through a 20 day cooling off period during which the SEC may require more information to be submitted 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. This limit is applied to either giving, or receiving, the gift. Treasurer of the township, whose bonds the firm is offering on an agency basis, is on the Board of Directors of the municipal firm StatusC C. II and III There is no representation required on the part of the buyer - when the restricted stock is sold through the rule, the buyer receives "clean" unrestricted shares from the transfer agent. This is retained by the broker-dealer or issuer selling the securities and is proof that the purchasers were accredited. Correct B. In April 2017, they were adjusted to $2,200 and $1,070,000 respectively. 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. StatusA A. I and III The best answer is A. United Way can sell the stock without restriction: Source: Sports lilustrated 2009 Almanac, .158\rho .158.158. Correct B. exempt under Regulation D The previous weeks' trading volumes are: II purchases of restricted stock 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. StatusA A. The market for this is PORTAL, but trading activity is thin in this market, especially as compared to the market for publicly traded securities. II 10% of the outstanding shares Determine the least-squares regression line for estimating the passer rating based on the percentage of passes that were touchdowns. Finally, the broker must represent that it did not solicit the transaction and that it acted as agent in executing the transaction. 225,750 shares StatusC C. 3 StatusC C. Both Tier 1 and Tier 2 offerings A: Intrastate offerings are subject to federal registration only B: Intrastate offerings are exempt from state 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 Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. Under the Securities Act of 1933, new issues are not marginable until how many days have elapsed from the effective date? II A Form 144 must be filed if the shares are to be sold I Disclosure in the registration documents is not complete II by the buyer of the restricted shares 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. The Form 144 is simply a notification to the SEC that stock will be sold in compliance with the Rule - the SEC does not approve of the sale. C. II, III, IV This research report cannot be sent, since it would be considered to be a prohibited "offer to sell" the securities. The client cannot make the investment unless he or she is an accredited investor StatusD D. This is permitted without restriction. II The proper documents for registration have been filed with the SEC III Resale of the securities is not permitted within that state for 6 months following the initial offering No, because the shares are being sold under a "de minimis" exemption No registration is required. IV A registered representative accompanies a customer to a show, for which the representative paid $200 for the tickets While no prospectus is required, each buyer must be given disclosure in an Offering Circular. If the Form 144 is filed today, the maximum sale is: There are 2 "tiers" to the rule. StatusB B. The best answer is A. Intrastate offerings are exempt from SEC registration, but are still subject to registration within the state where the offer is being made. 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 An unregistered hedge fund creates a website and uses it to promote itself to investors. Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. G. Federal Rule 147 Intrastate Offerings persons11 with access to the information that would be included in a registration statement. Such "QIBs" can buy unregistered private placement blocks and trade them with other "QIBs. 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. They are an exempt security under the Securities Act of 1933 and can be sold without a prospectus. I A Prospectus must be delivered to all purchasers The shares can be sold: 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 of the following statements are TRUE regarding the preliminary prospectus? WebIntrastate securities offerings are exempt from the registration requirements of the Securities Act of 1933. 73,000 shares / 4 = 18,250 shares The intent is to make it simpler for start-up companies to raise capital. StatusA A. 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). 2 StatusC C. 506,250 shares StatusC C. after holding the securities for an additional 6 months The best answer is C. Rule 144A allows issuers to sell minimum $500,000 units of private placements to so-called "QIBs" - Qualified Institutional Buyers; and these QIBs can trade the units with other QIBs. 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). If the officer wishes to sell the shares, the officer must meet all of the following requirements EXCEPT: 1,960,000 shares / 4 weeks = 490,000 share average In addition, the terms of the offering must be filed with FINRA and must comply with FINRA rules. Correct C. $100,000,000 of assets that it invests on a discretionary basis Correct C. II, III, IV II Treasury Bills StatusA A. I and III only Correct Answer B. StatusD D. I, II, III, IV. StatusB B. hypothecation agreement StatusA A. I and III Under SEC rules, the purchaser of a Regulation D private placement must complete and sign a(n): The prospectus is the disclosure document for new issues that are not exempt from registration. ", Which of the following activities are allowed once a registration statement for a new issue is filed with the SEC? 400,000 shares Correct B. during the 20 day cooling off period \text { Peyton Manning } & 94.7 & 5.7 & 2.8 \\ III A registered representative gives a customer $200 tickets to a show The failure of the weekly auctions in 2008 created a situation where holders could not sell these securities to get out of them. Thereafter, they can be resold interstate. The Federal Reserve trading desk can trade securities issued by the U.S. Government, Government Agencies, and prime Banker's Acceptances. All of the following are required to sell "144" stock EXCEPT: III Accepting a deposit from the customer 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. D. There is no time limitation on the period that a stabilizing bid can be maintained. 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. WebAll of the following statements regarding short term negotiable certificates of deposit are correct EXCEPT: A. the minimum denomination is $100,000B. 6 months It simply notifies the SEC that the issue is being offered in compliance with the exemption. 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. The company has 25,000,000 shares outstanding. Oct. 30th The maximum size of single offering under the rule is $1,000,000. Intrastate offerings are exempt from Federal Intrastate offerings are exempt from: StatusA A. I and III StatusD D. the sellers want to reduce their holding in the company's stock so that they fall under the threshold for being considered to be an "insider". c. Compute the value of the test statistic. The Federal Government only has jurisdiction over interstate offerings. The investment minimum is only $2,000 and the investor is not required to meet any income or net worth tests. Incorrect Answer C. $1,000,000 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 Answer A. Intrastate offerings are subject to: III Full disclosure must be made to investors C. I and III only The bank that structures the ADRs handles the registration. Private placements under Regulation D are typically only offered to "accredited investors." C. MSRB Rules StatusD D. there are no minimum income or net worth standards for individuals wishing to invest. 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 The interest rate on an Auction Rate Security is reset weekly or monthly II Rule 144A limits the amount of restricted securities that can be sold in the public markets Eurodollar bonds are sold outside the U.S. and thus do not fall under the Act. Legally, these are not considered to be offers of the security. \text { Carson Palmer } & 90.1 & 5.1 & 3.1 \\ I Any purchaser who received a preliminary prospectus must also receive the final prospectus WebWhich of the following statements is true? Correct A. I and III But the rule disallows this if the trust is formed for the purpose of buying the private placement! An investor wishes to sell restricted stock under the provisions of Rule 144. StatusC C. 1 year I Commercial Paper StatusA A. StatusD D. after holding the securities for an additional 1 year. StatusB B. I and IV The sale of Direct Participation Programs is regulated by all of the following EXCEPT: StatusD D. I, II, III, IV. Incorrect Answer A. SEC has approved the offering for sale to the public The filing of Form D is not a registration. Which of the following statements are TRUE regarding Rule 144A? 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. 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. StatusB B. I and IV StatusC C. I and III only Rule 147 is an exemption for an intrastate offering. D. Securities Act of 1933. Correct Answer C. 250,000 shares 1 Twitter 2 Facebook 3RSS 4YouTube Fines assessed for convictions involving violations of insider trading laws are paid to the: Under Regulation M, which statement is TRUE regarding stabilizing bids entered by market makers? This procedure is much faster and cheaper. IV Accepting a firm order from the customer II The preliminary prospectus may not be sent to a potential customer prior to that customer expressing an indication of interest 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. MNO has 50,000,000 shares outstanding. Rule 144A issues are NMS securities that are listed and trade on the NYSE, AMEX and NASDAQ The only way to resell them is in a "private transaction. Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following first sale. The best answer is B. Thus, the 1933 Act is concerned with the primary (new issue) market. 237,500 shares A director of a publicly held company wants to sell 5,000 registered shares of that company's stock at $8 per share that she has held for 3 months. 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 B. They are targeted at small investors. IV A bank or savings and loan institution StatusA A. I and II only Correct C. Regulation A When a customer buys a new stock issue from a syndicate member, the customer pays: StatusB B. II and IV only Rule 144A allows qualified institutional buyers ("QIBs") to buy and trade between themselves large blocks of privately placed issues. StatusC C. after holding the securities for 2 years The VC funding will be given preferred stock with warrants, or convertible debt that the company has to 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. A. I and II only -Intrastate offerings are subject to State registration -Intrastate offerings are exempt from Federal registration B. can recommend a new issue Which of the following are defined as "accredited investors" under Regulation D? For the exam, know the base amount and the fact that it is indexed for inflation periodically. U.S. Government issues, savings and loan issues, and municipal issues are exempt. I Fixed annuity contracts A company must determine the residence of each offeree and purchaser. Learning Center through glencoe.com StatusC C. solicitation of orders to buy is restricted to customers expressing interest within the past 10 days ", Which statements are TRUE regarding intrastate offerings under Rule 147? StatusD D. effective cost to potential purchasers has been established by the SEC. Choice "c" is incorrect. Conduct the following test of hypothesis using the .08 significance level.a. III FINRA regulation The rules: require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal permit a company to raise a maximum aggregate amount of $5 million through crowdfunding offerings in a 12-month period Your firm cannot act as a market maker in "144" shares. II Variable annuity contracts ", Which of the following statements are TRUE about Rule 147? Since the shares are being offered at the current market price of the stock, Choice B is false. The greater amount is 1% of outstanding shares, or 250,000 shares. After holding them for 3 months fully paid, the President wishes to sell the shares. This is prohibited under SEC rules $1,000,000 of assets that it invests on a discretionary basis Correct Answer C. 3 years II A preliminary prospectus may be sent to a prospective customer once the issue has entered into the 20 day cooling off period StatusC C. Yes, because she has not held the shares for 6 months State the decision rule. The last 4 weeks' trading volumes are: 2 years The best answer is A. 525,000 shares Read the code on FindLaw 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. WebWhich statements are TRUE regarding intrastate offerings? There is no minimum purchase amount that makes an individual accredited. StatusD D. A security which is purchased by an issuer that is not exempt from the provisions of the Securities Acts. This amount can be sold every 90 days (every 3 months), so a sale can occur 4 times per year. StatusC C. 18 months D. I, II, III, IV. The best answer is C. Insurance company offerings are exempt from the 1933 Act with the exception of variable annuity and variable life contracts. I A registered representative accepts a $300 gift from a customer 1% of 100,000,000 shares = 1,000,000 shares. Thus, a corporation distributing a stock dividend or splitting its stock would not require a registration statement filing. 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. Regulation D 3 months trading occurs in the secondary marketD. Oct. 23rd The Form 144 is filed on Monday, October 5th. IV at, or prior to, the placement of the order A registered representative has written discretionary authorization from a customer. IV Publishing a tombstone announcement SEC Regulation Crowdfunding sets the ground rules for these offerings. The weekly average of the preceding 4 weeks' trading volume is: The SEC initially adopted Rule 147 in 1974 to serve as a safe harbor for issuers that conduct intrastate offerings. The primary distribution of 300,000 shares consists of the newly issued shares where the proceeds will go to the issuer. StatusC C. I, II, III, IV A. I and II only StatusD D. 18,500 shares. Correct B. III and IV only Correct Answer C. 1,000,000 shares Small business investment companies are an exempt security under the Securities Act of 1933. A. StatusB B. I and IV Once the registration is effective, the final prospectus is used to offer and sell the issue. In April 2017, it was adjusted to $2,200.

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