Ch 2 Deck 11

Question 1

Rule 105 – Restrictions on short selling: restricted period is

Answer 1

the shorter of:

–Five days before the pricing of the issue to the pricing
–The time of initial filing of the registration to pricing

Question 2

Rule 105 – Restrictions on short selling: restricted period is usually 5 days because

Answer 2

pricing usually occurs right before the IPO begins, making the second option (time of initial filing of the registration to pricing) 20 days

Question 3

Rule 105 Restrictions on short selling only applies to

Answer 3

firm commitment offerings

Question 4

Exceptions to Rule 105 Restrictions on short selling

Answer 4

–Investment companies


–The “person” has separate accounts; the decisions for the separate accounts are made separately

Question 5

Examples of exempt securities under 1933 act

Answer 5

KNOW THIS LIST!
–U.S. Treasuries

–Municipal Securities
–Securities issued by a non-profit (e.g. Church Bonds)
–Commercial paper (matures under 9 months)
–Banker’s Acceptances (matures under 9 months)
–Eurobonds


Question 6

Securities that DO require registration with the SEC under 1933 act

Answer 6

Stocks
Corporate bonds
ADRs

Question 7

Regulation 147 Intrastate Offerings are used for

Answer 7

equity offerings that are truly local in nature (watch for use of ‘Interstate’ to trip you up)

Question 8

For Regulation 147 Intrastate Offerings issuer must be located

Answer 8

in-state and the issuer’s principal office must be in-state

Question 9

Financial requirements for Regulation 147 Intrastate Offerings issuer

Answer 9

–80% of revenues must come from within state

–80% of business’ assets must come from within state

–80% of the proceeds must be used in-state

Question 10

Regulation 147 Intrastate Offerings must be offered

Answer 10

only to in state residents

Question 11

Regulation 147 Intrastate Offerings include offerings and sales

Answer 11

made 6 months before or after as part of the issue

Question 12

Regulation 147 Intrastate Offerings can be sold to an out-of-state person

Answer 12

9 months after the issue is complete (ON TEST)

Question 13

Used for equity offerings of small U.S. businesses that want to issue under $5 million dollars

Answer 13

Regulation A

Question 14

Who can take advantage of Regulation A?


Answer 14

–Must be a U.S. or Canadian issuer (no other foreign companies)

- Must have a legitimate business plan
–Must be a non-SEC reporting entity (cannot be an SEC reporting company)
–Cannot be an investment company

–Cannot be disqualified


Question 15

Regulation A exemption amount is

Answer 15

–$5 million or less over a 12 month period


–No more than $1.5M of this can be from the sale of company insiders


Question 16

For a Regulation A issue, a registration statement

Answer 16

is not required, only a briefer offering circular

Question 17

For a Regulation A issue the waiting time after an offering circular is filed until it is effective
 is

Answer 17

20 days

Question 18

Restrictions on the number or type of owners for a Regulation A offerings:

Answer 18

none (unlike Reg D offerings)

Question 19

Geographical restrictions on Regulation A offerings

Answer 19

none (unlike Reg S or Rule 147 offerings)

Question 20

Regulation A offerings are NOT

Answer 20

integrated with offers that occur prior to the offering or 6 months after the offering.

Question 21

Integration means that

Answer 21

offerings are integrated such that the rules and stipulations are met (not quite the same as aggregate).


Question 22

In a regulation A offering the issuer can solicit interest before

Answer 22

filing the offering circular, but they cannot make offers of the securities.

Question 23

In a regulation A offering, after the circular has been filed

Answer 23

offers can be made

Question 24

In a regulation A offering after the circular has been filed, all written offers must

Answer 24

include the preliminary offering circular.


Question 25

In a regulation A offering sales can be made

Answer 25

after the offering circular has become effective.

Question 26

Rule 105 restrictions on short selling does not apply to

Answer 26

underwriters

Question 27

Regulation A exemption amount of $5M was extended in JOBS act to

Answer 27

$50M - watch for $5M or 50M as exemption amount on exam. They sometimes call this Regulation A+ so watch for that.