After holding them for 3 months fully paid, the President wishes to sell the shares. StatusD D. II and III, The best answer is C. Securities that are sold under a Rule 147 exemption (intrastate exemption) cannot be resold outside that state for 6 months following the initial offering. 3,000,000 shares / 4 weeks = 750,000 share average Correct C. II and III D)can be used to review the issue's creditworthiness. If the trust accumulated $5,000,000 for investment, it would be accredited. 250,000 shares The Federal Government only has jurisdiction over interstate offerings. StatusA A. 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). (see Exempt security, Non-exempt security, Prospectus), Which of the following activities are allowed prior to the filing of a registration statement? StatusB B. III and IV only The filing of Form D is not a registration. If an E-Mail is sent to 25 or fewer existing or prospective retail customers, it is defined as correspondence. 6 months StatusB B. Learning Center through glencoe.com Correct Answer C. the stock must be held for 6 months, fully paid 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. Restricted stock is best described by which of the following? StatusB B. StatusC C. II and III a one-page report about this area of 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. For the National Football League, ratings for the all-time leading passers were as shown below. 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. The 4 weeks' trading to be averaged are: \text { Joe Montana } & 92.3 & 5.2 & 2.6 \\ 2 years StatusA A. I and III only StatusB B. III and IV The company has 25,000,000 shares outstanding. 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 Governments settle "regular way" in 1 business day. They are targeted at small investors. Which of the following statements are TRUE regarding the preliminary prospectus? This client cannot make the investment because the dollar amount to be invested is too small 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. IV Municipal Debt If any of the securities are offered or sold to even one out-of-state person, the exemption may be lost. These shares are privately placed under Regulation D, and thus are exempt from registration. Correct B. I, II, III III The preliminary prospectus constitutes an offer to sell the issue Tier 2 offerings allow a maximum of $50 million to be raised, but require audited financial statements. B. can recommend a new issue Which of the following statements are TRUE about new registered stock offerings? StatusC C. 60 days If the SEC sets the "effective date" for an issue in registration, this means that all proper documents have been filed with the SEC. StatusD D. Neither Tier 1 nor Tier 2 offerings. "Crowdfunding" is the raising of capital by small start-up businesses through relatively small investment amounts. IV the weekly average of the prior 8 weeks' trading volume I Fixed annuity contracts (see Regulation D), Which of the following are accredited investors? B. can recommend a new issue The previous weeks' trading volumes are: III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers 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"). No, because the shares are being sold under a "de minimis" exemption StatusA A. I and II \text { Peyton Manning } & 94.7 & 5.7 & 2.8 \\ StatusD D. An individual investor who buys $2,000,000 of the offering. WebAll of the following regarding the official statement for a new municipal issue are true EXCEPT that it: A)meets disclosure requirements for purchasers of the new issue. The greater amount, 18,250 shares, can be sold during the next 90 days. The best answer is B. A. The best answer is B. 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. These are wealthy individuals and institutional investors. II they are sold on an agency basis 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 StatusC C. exempt under Rule 144 600,000 shares 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. Correct A. I and III If an issuer complies with all of the provisions of Rule 147, then the issuer will be deemed to have complied with Section 3 (a) (11). A start-up company looking to raise a small amount of "seed" capital would most likely use: All of the following would be considered a "control" relationship to be disclosed to customers EXCEPT the: IV The SEC has established the final offering price The Securities Act of 1933 There is no minimum purchase amount that makes an individual accredited. B. I and IV II Variable annuity contracts September 27th 18,000 shares Choice "a" is incorrect. The best answer is A. occupation. II Gift of baseball tickets with a value of $75 I The rule exempts intrastate issues from Federal registration 73,000 shares / 4 = 18,250 shares ", For an institutional investor to qualify as a "QIB" under Rule 144A, the institution must have at least: Eurodollar bonds are sold outside the U.S. and thus do not fall under the Act. October 4th 16,000 shares C. "Options can be used to hedge stock positions from loss" 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 StatusB B. a maximum of 4 sales per year are permitted StatusC C. I, II, III An indication of interest for a new stock offering is normally taken: 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. Rule 147 ), Crowdfunding offerings are typically: StatusD D. II and IV only. Included are investment companies, insurance companies, banks, trust funds, employee benefit plans, and employee retirement funds. (Regulation D -the private placement exemption - sets the requirements for "accredited" investors - these are wealthy individuals.) Nov 14 IV No disclosure is required to investors StatusA A. I and III StatusD D. there are no minimum income or net worth standards for individuals wishing to invest. A security of an issuer which has been bought in the open market by an officer or director of that company 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). III Listed option contracts 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 The best answer is C. Private placements are typically only offered to "accredited investors." Which are permitted under FINRA rules? I Intrastate offerings are subject to Federal registration Resales of restricted securities in the public markets must comply with the provisions of SEC Rule 144 (see Rule 144). It is permitted to distribute a red herring preliminary prospectus; to take non-binding indications of interest; and to publish an tombstone announcement. 10 This amount can be sold how many times a year? A managed offering of already outstanding shares is a secondary offering (such as a prospectus offering of officer's shares). Correct A. The sample mean is 2.59. III The 20-day cooling off period starts again once the amendment is filed As of October 30, 2015, 29 states and the District of Columbia have adopted rules for intrastate securities offerings that fit into the general category of securities crowdfunding that is, the offer of securities over the Internet to a large number of investors who invest relatively small amounts. II Solicitations of orders I registered distribution The best answer is A. StatusA A. I and II only Sell naked calls 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. Trades of U.S. job category securities, commodities, B. Incorrect Answer D. No, because the shares are not restricted. Regulation D is a private placement exemption, which can be used to raise any dollar amount. The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. StatusA A. before the 20 day cooling off period Correct C. Rule 144A issues trade in the PORTAL market from QIB to QIB StatusD D. 18,500 shares. II Rule 144A limits the amount of restricted securities that can be sold in the public markets D. II and IV D. can recommend stocks. New stock issues are sold under a prospectus that states the Public Offering Price which is inclusive of any compensation to the underwriter (the spread). StatusB B. I and IV I A preliminary prospectus may be sent to a prospective customer before the issue has entered into the 20 day cooling off period A A registration statement must be filed with FINRA prior to sale B A registration statement must be The SEC encourages the use of the internet and permits private placements under Regulation D to be offered via the web. Thus, a corporation distributing a stock dividend or splitting its stock would not require a registration statement filing. II State registration StatusD D. II and IV. These are private placement securities that are exempt from registration with the SEC. IV Resale is permitted to state residents only, for the 180 day period following the offering 200,000 shares This is permitted under SEC rules as long as the potential viewer completes and signs an accredited investor questionnaire before being given the password to enter (Test Note: The investment minimum and maximum amount that can be raised are subject to an inflation adjustment every 5 years. U.S. Government issues, savings and loan issues, and municipal issues are exempt. The company has 1,800,000 shares outstanding. An investor owns 20% of the outstanding shares of ABC Corporation, a publicly traded company. StatusB B. I and IV 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. Finally, the broker must represent that it did not solicit the transaction and that it acted as agent in executing the transaction. Under Rule 147, intrastate offerings cannot be resold out of state for how long following completion of the initial offering? The best answer is A. The Form 144 is filed on Monday, September 28th. III Treasury Bonds III A registered representative gives a customer $200 tickets to a show The offering price is $30 per WebThe Securities Exchange Act of 1934 regulates intrastate stock offerings made by a company.b. Additional commissions or charges above the P.O.P. Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. StatusD D. I, II, III, IV. The best answer is B. The Form 144 is filed on Monday, October 5th. 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). IV purchased by large investors 485,000 shares An "accredited investor questionnaire" is required when which type of offering is made to investors? the first date that a new issue can be sold to the public under the provisions of the Securities Act of 1933. Why do you think JCB chose to enter India via a joint venture, as opposed to some other entry mode? Since the shares are being offered at the current market price of the stock, Choice B is false. 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. Please note that a registration statement is not required to be filed if a corporation splits its stock or distributes a stock dividend, since such a distribution affects only the par value of the outstanding shares - it does not create a new class of security. This person can do so, without being subject to the Rule 144 volume limitations, after holding the securities for: Correct A. I and III 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. 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. 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. To sell, a Form 144 must be filed. Tier 2 requires more detailed information, including audited financial statements, and can be used for offerings of up to $50 million. StatusD D. $1,000,000,000 of assets that it invests on a discretionary basis. Which of the following is defined as an "accredited investor" under Regulation D? Which statement is TRUE about insurance coverage on customer brokerage accounts maintained at banks registered solely as municipal securities dealers? Rule 144 allows the sale, every 90 days, of: The previous weeks' trading volumes are: Correct Answer C. proper documents for registration have been filed with the SEC If a E-Mail is sent to more than 25 existing or prospective retail customers, then it is defined as a "retail communication," and furthermore, within that broad definition, it is defined as sales literature. III sales of control stock The best answer is B. III U.S. Government Bonds III Accepting a deposit from the customer Industrial companies are not exempt from the Securities Act of 1933. 525,000 shares The best answer is B. StatusC C. 8 weeks' trading volume 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. Conduct the following test of hypothesis using the .08 significance level.a. But the rule disallows this if the trust is formed for the purpose of buying the private placement! All of the following statements about e-mail sent by a registered representative to 50 retail clients are true EXCEPT the communication: The maximum size of single offering under the rule is $1,000,000. Incorrect Answer A. subscription agreement September 6th Non-profit organization with assets in excess of $2,000,000 Correct D. II and III only. The Federal Reserve trading desk can trade securities issued by the U.S. Government, Government Agencies, and prime Banker's Acceptances. 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). September 13th 19,000 shares StatusB B. 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. 24 months, The best answer is A. A. I and II only Rule 144 does not apply to stock purchases - it only applies to stock sales. The SEC does not approve of any new issue in registration, does not "certify" the issue, nor do they establish the offering price. II for established companies 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. StatusA A. I and II only (Test Note: The investment minimum is subject to an inflation adjustment every 5 years. September 6th IV The preliminary prospectus does not constitute an offer to sell the issue Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person II The rule exempts intrastate issues from State registration State Blue Sky Laws 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 up the stock price). A. This procedure is much faster and cheaper. Once the registration statement is filed, a preliminary prospectus can be sent; indications of interest can be accepted; and a "tombstone" announcement can be published. Assuming that all other requirements of the rule are met, the maximum sale amount is: StatusC C. 50 StatusD D. I, II, III, IV, Which of the following statements are TRUE regarding Rule 144A? The only way to resell them is in a "private transaction.". Incorrect Answer D. I, II, III, IV. The sale of Direct Participation Programs is regulated by all of the following EXCEPT: Under Regulation D, which of the following statements are TRUE? StatusA A. I and III 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. Correct B. I, III, IV The greater amount is 1% of outstanding shares, or 1,000,000 shares. 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: Resale is restricted to state residents for 6 months following the offering; thereafter, the issue can be sold interstate. Specific customer approval is needed for the registered representative to effect which of the following transactions in the customer's account? StatusD D. $5,000,000, The best answer is A. 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. I Rule 144A allows qualified institutional buyers to buy and trade between themselves large blocks of privately placed issues Oct. 23rd But the rule disallows this if the trust is formed for the purpose of buying the private placement! -Intrastate offerings are subject to State registration -Intrastate offerings are exempt from Federal registration All of the following statements are true about the Securities Act of 1933 the Once the "shelf" filing is made, by giving 2 days' notice to the SEC, the issuer can sell new securities in the market. Incorrect Answer C. II and III It gives an "E-Z" registration method for offerings of up to $50 million within a 12 month 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. StatusC C. The client cannot make the investment because the offering is only available to institutional investors StatusD D. I, II, III, IV. Correct Answer C. II and III StatusD D. II or IV, whichever is greater. 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 StatusB B. an offering circular must be provided to all purchasers occupation. The bank that structures the ADRs handles the registration. Treasurer of the township, whose bonds the firm is offering on an agency basis, is on the Board of Directors of the municipal firm WebAll of the following statements are true about Rule 147 EXCEPT: A. 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. Regulation Crowdfunding 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. 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) to be sold every 90 days. The best answer is B. I Rule 144A allows qualified institutional buyers to buy and trade between themselves large blocks of privately placed issues III Recommending the purchase of the issue StatusD D. Regulation D. The best answer is C. The announcement appears in the Wall Street Journal. Correct Answer C. the public offering price as stated in the prospectus without any commission The Act requires non-exempt issues to be registered with the SEC and sold with a prospectus. StatusC C. The research report may only be sent to customers who have bought new issues within the preceding 12 months Handbook Web site. Which statements are TRUE? I The spouse is considered to be an affiliated person subject to Rule 144 Correct Answer A. I and III 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). StatusA A. StatusD D. I, II, III, IV. However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. 400,000 shares Correct C. II, III, IV 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. Click on the OOH 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. Regulation A is intended to make it easier for smaller issuers to raise capital. StatusA A. I and IV only StatusA A. I and II only StatusB B. II and IV StatusC C. II and III Thus, the registration for the issue may never "go effective. The best answer is B. C. II and III The previous weeks' trading volumes are: September 20th 20,000 shares 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). IV Publishing a tombstone announcement IV Intrastate offerings are exempt from State registration The best answer is B. 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. 1 year 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 StatusC C. 9 months Correct C. I, II, III StatusB B. 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. StatusA A. II. 220,000 shares StatusA A. Nov 7 Correct Answer A. I or III, whichever is greater C. Purchase a municipal bond where the broker-dealer has a control relationship with the issuer II A registered representative pays for a $300 meal with a customer The research report may be sent to any customer if it is accompanied by a preliminary prospectus 2.Reversing the order of the intersected tables alters the result. StatusB B. II and III only The best answer is B. Industrial Company issues Which statements are TRUE regarding intrastate offerings under Rule 147? StatusC C. II, III, IV The MSRB has no regulatory authority over limited partnerships. 35 Municipal debt, U.S. Government debt and Foreign Government debt are all exempt. 3 months The only way to resell them is in a "private transaction. The best answer is A. III $50,000 II Stock split StatusC C. the issuer needs to raise substantial funds from its selling shareholders for some business purpose that is detailed in the prospectus StatusD D. Rule 144A issues cannot be traded in the public markets. III purchased by small investors 100% of the issue must be sold solely to state residents to obtain the exemption. Correct B. I and IV WebWhich statements are TRUE regarding intrastate offerings? September 20th 20,000 shares 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. An investor wishes to sell restricted stock under the provisions of Rule 144. II unregistered distribution Correct Answer A. they are likely to be officers and large shareholders of the company who must sell their shares either under the provisions of Rule 144 or who must sell their shares in a managed offering so that the existing trading market for the stock is not distorted 'S Acceptances U.S. job category securities, commodities, B following test hypothesis. Investors are permitted in a private placement exemption, which can be used raise. The Rule disallows this if the trust accumulated $ 5,000,000 for investment, it is to. State registration the best answer is a secondary offering ( such as a prospectus offering of 's... 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which statements are true regarding intrastate offerings?