Ch 2 Deck 6

Question 1

A prospectus is a sales document but also must provide

Answer 1

accurate and complete information - Everything that an investor needs to know to make an informed choice.

Question 2

Section 2 of Securities Act of 1933 gives a general definition of prospectus

Answer 2

Any written or broadcast offer to sell securities is considered a prospectus

Question 3

Any written offer to sell or solicitation of an offer to buy the securities in an offering that is used after a registration statement is filed

Answer 3

Free writing prospectus

Question 4

FWP can be used before registration is filed only by

Answer 4

WKSI’s

Question 5

For FWP’s, “Written” offer includes

Answer 5

scripted offer, i.e.

• broadcast on TV
• roadshow presentation slides

Question 6

FWP may include info not

Answer 6

in final prospectus

Question 7

FWP may not disagree with

Answer 7

info in final prospectus

Question 8

FWP must include legend saying

Answer 8

• registration statement has been filed

- place that they can obtain a copy of the preliminary prospectus

Question 9

FWP must be filed with the SEC no later than

Answer 9

first use

Question 10

FWP doesn’t need to be filed if

Answer 10

no substantive changes

Question 11

Preliminary prospectus is also called

Answer 11

red herring

Question 12

Preliminary prospectus is used during the time

Answer 12

between the filing of the registration statement and the effective date

Question 13

Preliminary prospectus is reviewed by

Answer 13

SEC

Question 14

When reviewing the preliminary prospectus SEC will issue a stop order if

Answer 14

it finds that the registration statement contains material omissions or misleading information

Question 15

If the SEC issues a stop order after reviewing a red herring, it suspends the process until

Answer 15

a rewrite is done and the amendment is filed

Question 16

If the SEC believes there has been insufficient disclosure in the registration statement, then

Answer 16

the issuer will receive a deficiency letter and the SEC will require an amendment

Question 17

if SEC requests no changes registration becomes effective

Answer 17

after 20 days

Question 18

Preliminary prospectus legend must be

Answer 18

on front cover in red

Question 19

Preliminary prospectus has all the same information as final except

Answer 19

doesn’t contain offering price

Question 20

Price is generally put in prospectus

Answer 20

right before the offering

Question 21

Must file how many copies of preliminary prospectus with SEC

Answer 21

5

Question 22

Final prospectus is used to

Answer 22

• register the security

- as a disclosure document for investors

Question 23

Must file how many copies of final prospectus with SEC

Answer 23

10

Question 24

Instructions for Narrative Disclosure in final prospectus found in

Answer 24

Regulation S-K

Question 25

Instructions for Financial Information found in

Answer 25

Regulation S-K

Question 26

SEC rule 405 defines a written communication as

Answer 26

Any communication that is “written, printed, a radio or television broadcast, or a graphic communication”

Question 27

SEC rule 405 includes in a graphic communication

Answer 27

Need to know
All forms of electronic media, including, but not limited to, audiotapes, video tapes, facsimiles, CD-ROM, Electronic mail, Internet websites, substantially similar messages widely distributed (rather than individually distributed) on telephone answering or voicemail systems, Computers, computer networks and other forms of computer data compilation.”

Question 28

Does red herring legend need to be red?

Answer 28

Traditionally is, but doesn’t have to be

Question 29

prelimary prospectus is carried on

Answer 29

road show

Question 30

Instructions for Financial Information is found in

Answer 30

Regulation S-X

Question 31

An FWP must be in what form?

Answer 31

Written form

Question 32

An FWP is a written offer to what

Answer 32

Sell or buy securities in an offering

Question 33

An FWP can only be used after

Answer 33

a registration statement is filed (only WKSI’s can use before)

Question 34

Who can use FWP’s before a registration statement is filed

Answer 34

WKSI’s