66-9 Flashcards
The Securities Act of 1933 regulates _____________.
new issues
What is the primary purpose of the Securities Act of 1933?
Provide investors with full and fair disclosure regarding new issues (prospectus)
True or False: The SEC judges an offering’s investment merit and provides approval.
False
May a preliminary prospectus (red herring) be sent during the cooling-off period?
yes
Indications of interest are _______________ on both the customer and BD.
non-binding
What should an RR do if a client sends a check to purchase securities going through the cooling-off period?
return the check to the customer
The ____________________ will not appear in a red herring.
final offering price
True or False: MSRB rules regulate the municipal activities of BDs, banks, and the employees of these institutions.
True
What is the purpose of a Tombstone Ad?
It calls attention to the new issuance of securities and members of the syndicate.
Who is responsible for the formulation and interpretation of rules for the municipal industry?
The MSRB
The Securities Exchange Act of 1934 regulates the ____________________.
secondary market
What U.S. Government agency, created by the ‘34 Act, enforces securities laws?
SEC
According to the Investment Company Act of 1940, who are considered affiliated persons of an investment company?
Officers/directors, members of the advisory board, employees, or owners of 5% or more of the voting stock
The cooling-off period for a federal securities registration is a minimum of _____ days.
20
What information will not be found in a preliminary prospectus?
The final public offering price and the effective date
The SEC may suspend trading in a security for up to _____ days.
10
The SEC may suspend trading on an exchange for up to _____ days with notification to the ____________.
90 days; President
Schedule _____ must be filed within _____ days if an investor acquires more than 5% of a publicly traded company.
13D; 10 days
May a firm advertise a hedge fund being offered through a Reg. D private placement to the general public?
No
Identify the acronym: CRD
Central Registration Depository
Identify the acronym: SRO
Self-Regulatory Organization
Identify the acronym: MSRB
Municipal Securities Rulemaking Board
Identify the acronym: FINRA
Financial Industry Regulatory Authority
What is Form 13F?
A report filed by investment managers with discretion over securities that exceed $100 million
Define securities information processor.
Any entity that collects and disseminates information regarding securities quotes and trades
Define omitting prospectus.
A written communication for mutual fund shares that contains limited information (less than a regular prospectus).
May an agent sell mutual fund shares to a client after giving them an omitting prospectus?
Yes, as long as she offers to give the customer the standard prospectus.
What are some of the forms that publicly traded companies must file with the SEC?
Registration statements, 10-K, 10-Q, 8-K, proxy statements, and possibly Schedule 13D
List some items that may be found on an income statement?
Revenues, expenses, net income, or net loss
The SEC may suspend trading in any security for up to ____ business days.
10
With notification to the president, the SEC may suspend all trading on an exchange for up to ____ days.
90
When must a mutual fund prospectus be delivered?
At or prior to the time of solicitation or when marketing materials are sent.
What is the balance sheet equation?
Assets = Liabilities + Shareholders’ Equity
How many 10-Q forms must a reporting issuer file per year?
Three. While 10-Q forms must be filed quarterly, a 10-K is filed at the end of the year in lieu of a fourth 10-Q.
The SEC may suspend trading on an exchange for up to ____ days.
90
If the SEC intends to suspend trading, who must receive advance notification?
The President, who must approve the decision
What is the purpose of providing investors with a preliminary prospectus (red herring)?
To disclose information and obtain indications of interest
True or False: Private placement offerings are exempt from registration under the Securities Act of 1933.
True
True or False: An intrastate offering is exempt from registration under the Securities Act of 1933.
True
True or False: Under the Securities Act of 1933, the sale of mutual fund shares is an example of an exempt transaction.
False. Mutual funds are generally offered to the public, sold by prospectus, and required to be registered with the SEC.
If a mutual fund intends to advertise its performance figures, what must be deducted?
All management fees and expenses
If a client owns more than 5% of a publicly traded company, what form is required to be filed with the SEC?
13D
Does the Investment Company Act of 1940 consider an investment company’s legal counsel an affiliated person?
No. An affiliated person is an officer, director, partner, employee, or 5% or greater owner of the shares.
Is shareholder approval required for a mutual fund’s adviser to be allowed to deviate from the fund’s investment policy?
yes
What is required for a mutual fund to be allowed to use the fund’s assets to pay the costs of distributing shares?
Shareholder approval
What is NOT required to be reported on an 8-K filing?
The location change of a subsidiary of a company
A corporation’s financial reports are reported to the SEC each year on Form _____.
10-K
According to NYSE rules, if the S&P 500 falls by 7% from the previous day’s close, trading will halt for ______ minutes.
15
According to NYSE rules, if the S&P 500 falls by 13% from the previous day’s close, trading will halt for ____ minutes.
15
If the S&P 500 falls by 20% from the previous day’s close, trading halts for ________________________.
remainder of the day
Under Reg. D ____ is the maximum number of non-accredited investors allowed in a Private Placement.
35
What must decline by a specific percentage to trigger a trading halt?
The S&P 500 Index
What form is filed with the SEC to announce that a firm is filing for bankruptcy?
8-K
