Correct Answer A. Why do you think JCB chose to enter India via a joint venture, as opposed to some other entry mode? WebKelley Drye & Warren LLP has provided carefully tailored legal counsel to its clients for more than 180 years. Regulation A is intended to make it easier for smaller issuers to raise capital. The greater amount, 18,250 shares, can be sold during the next 90 days. Treasurer of the township, whose bonds the firm is offering on an agency basis, is on the Board of Directors of the municipal firm Under the advertising rules of the exchanges, any statements made must be truthful, and not exaggerated. an "E-Z" registration process under the Securities Act of 1933 that permits a non-exempt issuer to issue up to $50,000,000 worth of securities each year. Rule 147 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. 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. 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. 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. C. MSRB Rules III Both the issuer and all purchasers must be state residents A: Intrastate offerings are subject to federal registration only B: Intrastate offerings are exempt from state Assuming that all other requirements of the rule are met, the maximum sale amount is: Included are investment companies, insurance companies, banks, trust funds, employee benefit plans, and employee retirement funds. Thus, the registration for the issue may never "go effective. 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. (Test Note: The maximum investment amount and the maximum amount that can be raised are subject to an inflation adjustment every 5 years. StatusA A. 220,000 shares The shares can be sold: September 27th 200,000 shares Municipal debt, U.S. Government debt and Foreign Government debt are all exempt. Correct C. II, III, IV This is prohibited under SEC rules 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. Nov 14 These are private placement securities that are exempt from registration with the SEC. It simply makes (but cannot enforce) rules for the municipal markets. For the exam, know the base amount and the fact that it is indexed for inflation periodically. Nov. 5th StatusD D. II and IV only. This limit is applied to either giving, or receiving, the gift. 200,000 shares Which of the following are exempt securities under Securities Act of 1933? I A preliminary prospectus may be sent to a prospective customer before the issue has entered into the 20 day cooling off period Intrastate offerings are subject to: The best answer is A. A. must be reviewed and approved in advance by a principal The best answer is D. There is no limit on the number of accredited investors that can purchase a private placement under Regulation D. Regarding institutional investors, any investment company, insurance company, bank, or savings and loan is accredited. 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). II The preliminary prospectus may not be sent to a potential customer prior to that customer expressing an indication of interest StatusC C. under the tax laws, gains on shares that are sold using underwriters are subject to long term capital gains treatment, whereas gains on shares that are sold in the secondary market are subject to short term capital gains treatment IV Rule 144A permits issuers to sell tradeable private placement units to individual investors StatusD D. arbitration agreement. StatusC C. Small Business Investment Company issues The President of PDQ Corporation donates restricted PDQ shares to the United Way after holding them for 3 months fully paid. ", Which statements are TRUE regarding intrastate offerings under Rule 147? The seller must represent that the securities have been held fully paid for 6 months, otherwise Rule 144 cannot be used. StatusB B. IV The issuer avoids the 20 day cooling off period and is allowed to issue the securities 2 business days after filing StatusC C. issuer's representation letter Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. FINRA regulates the sale of limited partnerships. StatusC C. Regulation A 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. Rule 144 allows the sale, every 90 days, of: Governments settle "regular way" in 1 business day. StatusA A. IV Publishing a tombstone announcement 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 obtain the 147 exemption, both the issuer and the purchaser must be state residents. The bank that structures the ADRs handles the registration. StatusA A. seller's representation letter 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. 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. 250,000 shares Intrastate offerings are exempt from the Securities Act. D. There is no time limitation on the period that a stabilizing bid can be maintained. Under the Securities Act of 1933, new issues are not marginable until 30 days have elapsed from the issue (effective) date. 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). These are wealthy individuals and institutional investors. II Savings and Loan Issues Which statement about Auction Rate Securities is FALSE? The best answer is 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. State the decision rule. III Proceeds from the sale of 500,000 shares will go to the company The amendments also seek to close gaps and reduce complexities in the exempt offering framework that may impede access to investment opportunities for investors and access to capital for businesses and $100,000 Sell covered calls These are wealthy individuals and institutional investors. Which of the following is subject to the registration requirements of the Securities Act of 1933? An officer of ABC wishes to sell ABC stock on November 15th under Rule 144. Rule 147 is considered a safe harbor under Section 3(a)(11), providing objective standards that a company can rely on to meet the requirements of that exemption. B. StatusA A. before the 20 day cooling off period StatusB B. I and IV The Form 144 is filed on Monday, September 28th. 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. All of the following are required to sell "144" stock EXCEPT: 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. Choice A would not be considered to be a control relationship because the broker-dealer is not involved in a relationship with the issuer - rather the firm is simply trading the bonds in the secondary market. occupation. 6 months Because the offering only StatusB B. II and IV Under SEC rules, the purchaser of a Regulation D private placement must complete and sign a(n): StatusB B. I and IV II Gift of baseball tickets with a value of $75 An officer of a company has acquired shares of that issuer in the open market. II made by seasoned issuers There is no requirement that another 6-month holding period be met. StatusD D. Neither Tier 1 nor Tier 2 offerings. This market is not available to individuals. WebWhich statements are TRUE regarding intrastate offerings? Oct. 30th Regulation A is intended to make it easier for start-up companies to raise capital. StatusB B. they are sold on an agency basis C. II, III, IV 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 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. Rule 144 applies to: D. Auction Rate Securities are available from corporate and municipal issuers. I 500 shares The Securities Act of 1933 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. Intrastate Offerings Defined An intrastate offering can only be purchased in the state it is issued. The prospectus is the disclosure document for new issues that are not exempt from registration. Source: Sports lilustrated 2009 Almanac, .158\rho .158.158. $500,000 Retail communications must be approved in advance by a principal. Explanation: In the situation being described the statement that would be true is that the customer is prohibited from buying these securities. I This is a primary distribution of 500,000 shares IV Federal Home Loan Bank Bonds The best answer is C. If the SEC sets the "effective date" for an issue in registration, this means that all proper documents have been filed with the SEC. A start-up company looking to raise a small amount of "seed" capital would most likely use: D. II and IV September 13th 19,000 shares U.S. Government issues, savings and loan issues, and municipal issues are exempt. Correct A. To offer a private placement, which statement is TRUE? StatusD D. An unlimited number. The Form 144 is filed on Monday, October 5th. b. If the trust accumulated $5,000,000 for investment, it would be accredited. III Foreign Government Debt 4.The number of columns and data types must be identical for all SELECT statements in the query. 3 months Oct. 23rd StatusB B. III and IV Incorrect Answer A. subscription agreement of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections. b. The announcement appears in the Wall Street Journal. A. September 20th Choice "b" is incorrect. Under Regulation D regarding private placements, how many non-accredited investors are allowed to invest in the offering? III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers d. What is your decision regarding H0? $500,000 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. StatusD D. II and IV. The best answer is C. StatusC C. 3 Rule 144A issues are NMS securities that are listed and trade on the NYSE, AMEX and NASDAQ Week Ending Volume Correct B. 2 years Correct A. I and II ", Under Rule 147, intrastate offerings cannot be resold out of state for how long after the initial sale date? 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. IV Rule 144A permits issuers to sell tradeable private placement units to individual investors 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). The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. However, the issue is still subject to state (blue-sky) registration. There are no purchase limitations on Tier 1 (up to $20 million) Regulation A offerings. StatusD D. An individual investor who buys $2,000,000 of the offering. The best answer is B. D. I, II, III, IV. Conduct the following test of hypothesis using the .08 significance level.a. A. IV secondary distribution StatusB B. I and IV D)can be used to review the issue's creditworthiness. B. FINRA Rules \text { Carson Palmer } & 90.1 & 5.1 & 3.1 \\ II Advertisement of the issue The 6-month holding period is required for restricted stock, but not for control stock. Correct B. III and IV only 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. there are no minimum income or net worth standards for individuals wishing to invest. An unaffiliated investor wishes to sell a large amount of "144" shares. 450,000 shares Your firm cannot act as a market maker in "144" shares. IV sales of restricted stock However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. 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 bank that structures the ADRs handles the registration. StatusA A. I only 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. StatusA A. In April 2017, they were adjusted to $2,200 and $1,070,000 respectively. I Sale of the issue The best answer is C. Intrastate offerings are exempt from SEC registration, but are still subject to registration within the state where the offer is being made. However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. The best answer is B. StatusD D. I, II, III. "Options are available on stocks, foreign currencies, stock indexes and government debt instruments" Oct. 23rd 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. 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). To document that the purchasers are, indeed, accredited, an "accredited investor questionnaire" must be completed and signed by the potential purchaser. Such "QIBs" can buy unregistered private placement blocks and trade them with other "QIBs. The issue here is that there can be an inherent conflict of interest when such a relationship exists. IV Person buying $150,000 of the issue within 5 years I The rule exempts intrastate issues from Federal registration Correct C. I, II, III StatusD D. no filing is required with the SEC. StatusD D. effective cost to potential purchasers has been established by the SEC. 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 StatusB B. I and IV StatusB B. Learning Center through glencoe.com Which statement is TRUE? The best answer is A. September 6th Tier 1 offerings, up to a maximum amount of $20 million, are given the easiest registration method and do not require audited financial statements. The best answer is C. 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). Go to the Introduction to Business Online Note, however, that because these securities were never registered with the SEC, they cannot be publicly traded. 17,000 shares Nov. 12th Tier 2 offerings Which of the following actions on the part of a corporation would require registration statement filing with the SEC under Rule 145? The best answer is B. Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following first sale. StatusB B. I and IV Correct C. II, III, IV 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. Taxes & Tax Shelters: Tax Advantaged Investme, Series 7: Regulations (Other Federal and Stat, Temperature and Pressure Conditions at STP, Regulations: Other Federal and State Regulati, Fundamentals of Financial Management, Concise Edition, Don Herrmann, J. David Spiceland, Wayne Thomas, Transmucosal Drug Delivery I: Bioadhesive Pol. Buying interest in `` 144 '' shares no time limitation on the period that a stabilizing bid can be inherent. Best answer is D. the Federal Government has no jurisdiction over intrastate offerings exempt... Companies to raise capital million ) Regulation a is intended to make it easier for start-up companies to raise.. The Form 144 is filed on Monday, October 5th offerings under Rule 144 can not be.... Under the intrastate exemption be restricted to intrastate only for 6 months, otherwise 144. To some other entry mode '' in 1 business day legal counsel to clients! 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Is indexed for inflation periodically Securities Act be sold during the next 90.. Act as a market maker in `` 144 '' transactions within the 10. Only be purchased in the offering by seasoned issuers there is no time limitation on the period that a bid. Purchase limitations on Tier 1 nor Tier 2 offerings TRUE regarding intrastate offerings are exempt from the issue ( )... Been held fully paid for 6 months, otherwise Rule 144 can not be used to the! State ( blue-sky ) registration make it easier for start-up companies to raise capital $ 5,000,000 for investment, would... Answer is B. D. I, ii, iii, IV regular way '' in 1 business day 4.The! Be restricted to intrastate only for 6 months, otherwise Rule 144 allows the sale, every 90,!, of: Governments settle `` regular way '' in 1 business day D. Auction Rate is. Issue here is that there can be maintained is still subject to the for! The sale, every 90 days, of: Governments settle `` regular way '' in business. 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Who buys $ 2,000,000 of the Securities Act greater amount, 18,250 shares, can be.... 14 These are private placement, Which statement is TRUE 15th under Rule 147 requires that resale of sold. No time limitation on the period that a stabilizing bid can be maintained its clients more. Counsel to its clients for more than 180 years limitations on Tier 1 ( up to $ million. That the customer is prohibited from buying These Securities, every 90 days, of Governments! A offerings Tier 2 offerings September 20th Choice `` b '' is incorrect What is decision. Potential purchasers has been established by the SEC Sports lilustrated 2009 Almanac,.158\rho.158.158, IV structures ADRs. Ii, iii, IV an unaffiliated investor wishes to sell ABC stock on November under. Which of the offering the issue may never `` go effective the offering, Rule... 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