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S 66 > Ch. 9 > Flashcards

Ch. 9 Flashcards

1
Q

An underwriter is most likely registered as a ____________.

A

Broker dealer

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2
Q

Name two prohibitions that relate to being an insider.

A
  1. No shorting of the stock
  2. No keeping it short swing profits
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3
Q

The final ________ ______ will not appear in a red herring.

A

Offering price

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4
Q

T/F: the SEC judges an offerings investment merit and provides approval

A

F

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5
Q

The SEC may suspend trading on an exchange for up to _____ days.

A

90

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6
Q

The cooling off period for a federal securities registration is a minimum of _____ days.

A

20

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7
Q

If a mutual fund intends to advertise its performance figures, what must be deducted?

A

All management fees and expenses

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8
Q

What percentage of investors must be residents of the state for a security to be exempt under Rule 147?

A

100%

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9
Q

List some items that may be found on an income statement of a corporation.

A

Revenues, expenses, net income, or net loss

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10
Q

May an agent sell mutual fund shares to a client after giving the client an omitting prospectus?

A

Yes, as long as she offered to give. The customer the standard prospectus

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11
Q

Criminal penalties for violating the IA Act of 1940 may not exceed $_____ and/or imprisonment not exceeding ______ years.

A

$10,000; five

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12
Q

T/F: 100% of investors must be state residents to qualify for the Rule 147 intrastate exemption.

A

T

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13
Q

The Securities Act of 1933 regulates __________.

A

New issues

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14
Q

A new issue being offered in one state only is _________ from federal registration under SEC Rule _______.

A

Exempt; 147

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15
Q

Accredited investors have net worth of at least $_______ or pre tax income in each of the last two years of $_______.

A

$1,000,000 ; $200,000

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16
Q

Due to a significant event, when is an issuer required to file a Form 8-k?

A

Within four business days of the event. However, compliance with Regulation FD may require filing sooner

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17
Q

The SEC may suspend trading on an exchange for up to _______ days with notification to the _____________.

A

90 ; President of the US

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18
Q

Is shareholder approval required for a mutual funds adviser to be allowed to deviate from the funds investment policy?

A

Yes

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19
Q

If a client owns more than 5% of a publicly traded company, what form is required to be filed with the SEC?

A

Form 13D

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20
Q

What are treble damages?

A

The civil penalty for insider trading, which is three times the profit made or loss avoided

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21
Q

Does the Investment Company Act of 1940 consider an investment company’s legal counsel an affiliated person?

A

No. An affiliated person is an officer, director, partner, employee, or 5% or greater owner of the shares

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22
Q

May a preliminary prospectus (red herring) be sent during the cooling off period?

A

Yes. The red herring is used to obtain indications of interest from potential purchasers

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23
Q

T/F: An intrastate offering is exempt from registration under the Securities Act of 1933.

A

T

24
Q

The SEC may suspend trading in any security for up to _____ business days.

A

10

25
Q

T/F: Private placement offerings are exempt from registration under the Securities Act of 1933.

A

T

26
Q

What is the maximum penalty for criminal violations of the Investment Company Act of 1940?

A

Five years in prison and/or a $10,000 fine

27
Q

If the SEC intends to suspend all trading, who must receive advance notification?

A

The President of the US, who just notify the SEC that he does not disapprove of the decision

28
Q

What US Government agency, created by the 1934 Act, enforced securities laws?

A

The SEC

29
Q

Insiders must return short swing profits, which are profits earned on stock that has been held for less than _____ months.

A

Six

30
Q

When must a mutual fund prospectus be delivered?

A

At or prior to the time of solicitation or when marketing materials are sent.

31
Q

The criminal penalty for insider trading by an individual is a maximum $________ and/or ____ years in prison.

A

$5 million; 20 years

32
Q

What is NOT required to be reported on an 8-k filing?

A

The location change of a subsidiary of a company

33
Q

What is Form 13F?

A

A report filed by investment managers with discretion over securities that exceed $100 million

34
Q

The Securities Exchange Act of 1934 regulates the __________ ________.

A

Secondary Market

35
Q

The SEC may suspend trading in a security for up to ______ days.

A

10

36
Q

What is the purpose of providing investors with a preliminary prospectus (red herring)?

A

To disclose information and obtain indications of interest

37
Q

T/F: Under the Securities Act of 1933, the sale of mutual fund shares is an example of an exempt transaction.

A

F; mutual funds are generally offered to the public, sold by prospectus, and required to be registered with the SEC

38
Q

Regarding the underwriting of an issue, what is the purpose of holding a due diligence meeting?

A

To ensure the accuracy and completeness of all of the information being distributed to the public.

39
Q

What is required for a mutual fund to be allowed to use the funds assets to pay the costs of distributing shares?

A

Shareholder approval

40
Q

Indications of interest are ___________ on both the customer and BD.

A

Non-binding

41
Q

Identify the acronym: SRO

A

Self regulatory organization

42
Q

What are some of the forms that publicly traded companies must file with the SEC?

A

Registration statements, 10-k, 10-q, 8-k, proxy statements, and possibly scheduled 13D

43
Q

What must issuers have to qualify for the Rule 147 intrastate exemption?

A

The issuer must have its principal place of business in that state

44
Q

How many 10-a forms must a reporting issuer file per year?

A

Three. While 10-w forms must be filed quarterly, a 10-k is filed at the end of the year in lieu of a fourth 10-q

45
Q

During the registration cooling off period, what should an agent do if a client sends a check to purchase securities?

A

Return the check to the customer

46
Q

A corporations financial reports are reported to the SEC each year on Form _____.

A

10-k

47
Q

Identify the acronym: FINRA

A

Financial Industry Regulatory Authority

48
Q

What is the purpose of a Tombstone Ad?

A

It calls attention to the new issuance of securities and members of the syndicate

49
Q

According to the Investment Company Act of 1940, who are considered affiliated persons of an investment company?

A

Officers/directors, members of the advisory board, employees, or owners of 5% or more of the voting stock

50
Q

What is the primary purpose of the Securities Act of 1933?

A

Provide investors with full and fair disclosure regarding new issues (prospectus)

51
Q

Schedule _____ must be files within ______ days if an investor acquires more than 5% of a publicly traded company.

A

13D; 10 days

52
Q

Define omitting prospectus.

A

A written communication for mutual fund shares that contains limited information (less than a regular prospectus)

53
Q

What information will not be found in a preliminary prospectus?

A

The final public offering price and the effective date

54
Q

Under Reg D, securities distributed through a private placement may be sold to how many non accredited investors?

A

No more than 35

55
Q

What form is filed with the SEC to announce that a firm is filing for bankruptcy?

A

Form 8-k

56
Q

Under Reg D private placement, _______ is the maximum number of non accredited investors allowed.

A

35

S 66 (12 decks)

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