Ch 2 Deck 16 Flashcards

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1
Q

Agent at broker-dealer is restricted person unless only associated with

A

Limited Broker Dealer

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2
Q

A Limited Broker Dealer is only authorized to engage in 2 types of securities

A

sale of investment company/variable contracts

direct participation

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3
Q

FINRA 5110 defines Participating Member as

A

FINRA Member
Affiliate of member
Associated persons
Immediate family members of AP’s

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4
Q

One or more exchange listed DPP’s are reorganized into one or more exchange listed entities

A

DPP rollup

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5
Q

A transaction is only a DPP rollup if investors in any of the involved DPP’s are:

A
  1. subject of an adverse change in the terms of their investment
  2. not provided with a way to keep their original terms
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6
Q

A DPP rollup is usually done to turn a

A

previously illiquid DPP into a liquid investment

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7
Q

DPP rollups are usually subject to

A

an investor vote

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8
Q

Prior to a proposed DPP rollup vote, proper

A

disclosure documents should be presented to investors

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9
Q

DPP rollup disclosure documents must include

A
  1. Risk Factors
  2. GP’s belief in fairness of transaction
  3. any reports or opinions on fairness
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10
Q

FINRA restrictions on DPP rollups are designed to keep members from pressuring

A

investors to vote yes on a vote to implement a DPP rollup

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11
Q

In a DPP rollup, FINRA member firms are prohibited from receiving compensation for

A

soliciting votes or tenders from participants (unless specific conditions are met)

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12
Q

In a DPP rollup, FINRA members can receive compensation for soliciting votes or tenders from participants if three conditions are met:

A
  1. Payable and equal in amount regardless of how participant ends up voting
  2. does not exceed in the aggregate 2% of exchange value of securities
  3. is paid regardless of whether participants reject rollup
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13
Q

SEC can suspend trading on any national exchange for

A

up to 90 calendar days

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14
Q

Market makers can enter on the OTCBB three types of bid/offers:

A
  1. priced bid and/or offer
  2. unpriced indication of interest
  3. bid accompanied by modifier
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15
Q

2 types of unpriced indications of interest a market maker can enter on OTCBB

A

“bid wanted”

“offer wanted”

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16
Q

Market makers on OTCBB enter a bid or offer accompanied by a modifier to

A

reflect unsolicited customer interest

17
Q

Rule 135A states that generic advertising will not be deemed

A

an offer for sale if it meets certain requirements

18
Q

Rule 135A generic advertisements can be in the form of

A

letters, advertisements, notices, signs, or other communications

19
Q

Rule 135A generic advertisements are not offers for sale if they do not mention

A
  1. a specific security for sale

2. name of a specific investment company

20
Q

Rule 135A generic advertisements must include

A

name and address of registered broker dealer responsible for communication

21
Q

Rule 5121 restricts the sale of securities in a distribution of a new issue to

A

discretionary accounts of broker dealers

22
Q

Rule 5121 only allows distribution of securities in a new issue to discretionary accounts of the distributing broker dealer if

A

they receive prior written authorization from the account holder

23
Q

Under securities act of 1933 it is necessary to register a security if

A

any channel of interstate commerce will be used to sell the issue

24
Q

A person may not sell an equity security short (both rules) between:

A
  1. Initial filing of registration statement to pricing

2. Five business days before pricing to pricing