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Series 66 > Ch 9 Federal Securities Acts > Flashcards

Ch 9 Federal Securities Acts Flashcards

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Series 66 flashcards
1
Q

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

A

Yes

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2
Q

When must a mutual fund prospectus be delivered?

A

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

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3
Q

Identify the acronym: SRO

A

Self-Regulatory Organization (such as FINRA)

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4
Q

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

A

10 days.

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5
Q

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

A

90 days.

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6
Q

True or False: An intrastate offering is exempt from registration under the Securities Act of 1933.

A

True

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7
Q

True or False: 100% of investors must be state residents to qualify for the Rule 147 intrastate exemption.

A

True

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8
Q

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

A

Shareholder approval

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9
Q

True or False: Under the Securities Act of 1933, the sale of mutual fund shares is an example of an exempt transaction.

A

False. Mutual funds are generally offered to the public, sold by prospectus, and required to be registered with the SEC.

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10
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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11
Q

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

A

Form 8-K

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12
Q

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

A

$10,000 and/or imprisonment not exceeding five years.

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13
Q

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

A

non-binding

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14
Q

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

A

offering price

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15
Q

True or False: Private placement offerings are exempt from registration under the Securities Act of 1933.

A

True

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16
Q

An underwriter is most likely registered as a _____________.

A

broker-dealer.

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17
Q

The Securities Act of 1933 regulates ____________.

A

new issues.

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18
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

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19
Q

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

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20
Q

What is Form 13F?

A

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

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21
Q

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

A

No more than 35

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22
Q

What information will not be found in a preliminary prospectus?

A

The final public offering price and the effective date

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23
Q

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

A

All management fees and expenses

24
Q

The Securities Exchange Act of 1934 regulates the __________ _______.

A

Secondary Market.

25
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

26
Q

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

A

Revenues, expenses, net income, or net loss

27
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

28
Q

Identify the acronym: FINRA

A

Financial Industry Regulatory Authority

29
Q

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

A

exempt from federal registration under SEC Rule 147.

30
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 or pre-tax income in each of the last two years of $200,000.

31
Q

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

A

To disclose information and obtain indications of interest

32
Q

Name two prohibitions that relate to being an insider.

A
  1. No shorting of the stock and 2. No keeping of short-swing profits
33
Q

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

A

20 days.

34
Q

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

A

$5 million and/or 20 years in prison.

35
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

36
Q

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

A

13D must be filed within 10 days

37
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

38
Q

True or False: The SEC judges an offering’s investment merit and provides approval.

A

False

39
Q

What is the purpose of a Tombstone Ad?

A

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

40
Q

What are treble damages?

A

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

41
Q

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

A

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.

42
Q

A corporation’s financial reports are reported to the SEC each year on Form _____.

A

Form 10-K.

43
Q

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

A

90 days with notification to the President of the U.S.

44
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 Schedule 13D

45
Q

Define omitting prospectus.

A

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

46
Q

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

A

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

47
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.

48
Q

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

A

10 business days.

49
Q

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

A

35

50
Q

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

A

The location change of a subsidiary of a company

51
Q

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

A

100%

52
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.

53
Q

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

A

six months.

54
Q

What U.S. Government agency, created by the ‘34 Act, enforces securities laws?

A

The Securities and Exchange Commission (SEC)

55
Q

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

A

The President of the U.S., who must notify the SEC that he does not disapprove of the decision.

56
Q

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

A

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

Series 66 (21 decks)

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