20: NEW ISSUES MARKET (255) Flashcards
Can a RR send sales literature about a variable annuity w/o sending the prospectus?
No
A prospectus must always precedy or accompany any solicitation
T/F: When recomending variable annuities, A prospectus must precede or accompany any solicitation, including distribution of sales literature to retail customers
True
T/F: You may solicit transactions during the mandatory 20-day cooling-off period
False
During the 20-day cooling-off period, only unsolicited requests for information may be honored. Soliciting sales is prohibited.
Can you publish a tombstone ad during the 20 day cooling off period?
Yes
can you foward a preliminary prospectus to a customer during the 20 day cooling off period?
Yes
T/F: If the transaction is exempt, a security that would otherwise have to be registered is exempt from registration
True
Can cooling off period be longer than 20 days?
Yes
What happens to communication between issuer and underwriter during the 20 day cooling off period
communication between underwriter and issuing company must be minimized or silenced altogether.
29 day cooling off period comes after the ISSUER files ______
Registration statement
Tombstone ad
newspaper ad that’s shaped like a, well, tombstone (it’s rectangular with black borders) — is simply an announcement (not an offer) of a new security for sale. It’s the only advertisement allowed during the cooling-off period.
Only advertisement allowed during cooling off period
Tombstone ad
T/F: The preliminary prospectus must be made available to all customers who are interested in the new issue during the cooling-off period.
True
In a new issue, who gives out the preliminary prospectus
Underwriters and selling group members use the preliminary prospectus to obtain indications of interest from prospective customers.
What is the purpose of a preliminary prospectus
During the cooling off period, Underwriters and selling group members use the preliminary prospectus to obtain indications of interest from prospective customers.
[New issues] When is the last point in time that syndicate members can back out of an underwriting agreement
toward the end of the cooling-off period (around the time of the due diligence meeting). You can assume that if syndicate members are backing out, it’s most likely due to negative market condition
Can underwriters give out info about an issuer during the 20 day cooling off period following the registration statement?
Yes, but only if it’s an unsolicited request for information
You can’t give our advertising material to people who didn’t ask for it
T/F: The preliminary prospectus will include an overview and history of the issuer’s business and any risks associated with the offering.
True
>overview of history and also
> any risks associated with the offering
T/F: The preliminary prospectus cannot include the effective date or the public offering price because they have yet to be determined
True
Don’t know those things yet
T/F: A preliminary prospectus will include the effective date of the offering and the final offering price.
False
Don’t know those things yet
> usually includes an expected price range but not final offering price
“The preliminary prospectus cannot include the effective date or the public offering price because they have yet to be determined. It will generally include the expected price range, but not the final offering price.”
For a Reg D offering, do officers or directors of the issuer count as accredited investors?
Yes
They count
T/F: A mini-max agreement is a best efforts underwriting setting a floor, or minimum, which is the least amount the issuer needs to raise to move forward with the underwriting, and a ceiling, or maximum, on the dollar amount of securities the issuer is willing to sell.
True
> sets Min amount issuer needs to raise to move forward
max $ amount of securities issuer willing to sell
T/F: A mini-max underwriting is a firm underwriting agreement
False, mini-max agreement is a type of best efforts underwriting
> sets min amount the issuer needs to raise to move forward with the underwriting
and max dollar amount of securities issuer is willing to sell
T/F: A registered secondary offering is the sale of previously issued stock to the public.
True
An example would be a selling stockholder (typically an insider or affiliate) wishing to sell more than Rule 144’s safe harbor.