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Series 79 - Version of Detailed Subsections of Chapter > Chapter 2: Public Offerings > Flashcards

Chapter 2: Public Offerings Flashcards

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Series 79 Top-Off Exam flashcards
1
Q

Securities Act of 1933

A

Primary goal is the disclosure of information needed by investors to make investment decisions.

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2
Q

Section 5 of the Securities Act

A

Creates 3 distinct periods in the registration process: Pre-Filing Period, Registration (Cooling Off) Period, and Post Effective Period.

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3
Q

Pre-Filing Period

A

The period before the filing of the registration statement.

The marketing and sales of the offer is prohibited.

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4
Q

Registration (Cooling Off) Period

A

Period after filing the registration statement but before the effective date.
Written offers to sell are limited to the preliminary prospectus, free writing prospectus, road show presentations, and generic announcements.
Oral offers are allowed, but sales are forbidden.

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5
Q

Post Effective Period

A

Sales can be made.

Written and oral offers are accompanied by a prospectus.

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6
Q

Section 7 of the Securities Act

A

Determines what information is to be included in the registration statements.

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7
Q

Schedule A

A

Lists 32 types of information to be included in a registration statement pursuant to Section 7.

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8
Q

Regulation S-K: Narrative Disclosure

A

Provides instruction on specific narrative disclosure items that must be included in filings.

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9
Q

Regulation S-X: Financial Statements

A

Provides instruction on financials included in a registration statement.
Audited BS for the last 2 years.
Audited IS & CFS for the last 3 years.
Analysis of changes in stockholder equity.

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10
Q

Forms of Registration Statements

A 
Form S-1: IPO, Unseasoned Issuer
Form S-3: Seasoned Issuers
Form F-1: Foreign Unseasoned Issuer
Form F-3: Foreign Seasoned Issuer
Form S-11: Real Estate Investment Co.
Form S-8: Employee Stock Purchase Plan
Form S-4: Mergers
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11
Q

Form S-1

A

Used for all IPOs and for offerings by unseasoned reporting issuers.
The most detailed registration form.

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12
Q

Form S-3

A

Abbreviated form for seasoned issuers with a public float of at least $75 million or listed on a national exchange.

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13
Q

Well Known Seasoned Issuer (WKSI)

A

Defined by Rule 405.
Can use S-3 or F-3.
Public float of at least $700 million or has issued at least $1B in non-convertible securities other than common within last 3 years.

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14
Q

Seasoned Issuer

A

Eligible to use S-3, but does not meet financial definition of WKSI

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15
Q

Unseasoned Reporting Issuer

A

Issuer that is not eligible to file S-3, but is required to file reports with the SEC.

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16
Q

Non-Reporting Issuer

A

A company that is not required to file reports with the SEC.

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17
Q

Ineligible Issuer

A

A company that: has failed to meet reporting requirements, is a shell company, is an issuer of penny stock, has declared bankruptcy.

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18
Q

Section 2 of the Securities Act

A

A registration becomes effective 20 days after filing. The SEC has 10 days after filing to refuse effectiveness.

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19
Q

Shelf Registration

A

Issuer files single registration for delayed or multiple offerings.
Only available to seasoned or WKSI issuers.
Must re-register every 3 years.

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20
Q

Automatic Shelf Registration Statements

A

WKSI filing an S-3 or F-3 can simply elect to file an automatic shelf registration.

Becomes effective at filing.

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21
Q

Section 10A of the Securities Act: Audit Requirements

A

Financial statements that are filed with a registration statement are required to be audited by a registered public accounting firm.

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22
Q

SEC Rule 405

A

Categories of issuers:

Ineligible Issuer, Non-Reporting Issuer, Unseasoned Reporting Issuer, Seasoned Reporting Issuer, and WKSI

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23
Q

Procedures Required by Section 10A of the Exchange Act

A

Detection of illegal acts that would impact financial statements.
Identify related party transactions.
Analysis of going concern ability.

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24
Q

Section 10A Responses

A

If illegal act is discovered, auditor must notify issuer management and BOD. BOD has 1 day to notify the SEC. If auditor does not get copy of SEC notice within 1 day, it can resign, but it must notify the SEC of the illegal acts.

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25
Q

Section 10A Prohibited Acts

A

Prohibits auditor from performing certain non-audit services to issuer. Any approved exceptions must be disclosed.

26
Q

Section 10A Conflicts of Interest

A

Prohibited from performing audit if any issuer officer worked for auditor and was involved with an audit of the issuer within the last year.

27
Q

Section 2(a)(10) of the Securities Act: Definition of the Prospectus

A

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

28
Q

Exceptions to Prospectus Definition

A

Communication after the effective date if there already is a prospectus.
A notice that just states the security, price and who is executing the sale AND how to get a prospectus.

29
Q

Free Writing Prospectus: Defined by Rule 405

A

Any written communication that is an offer to sell or buy AND is used after the registration statement is filed.

30
Q

Rule 405: Written Communication

A

Written, printed, electronic communications, radio and tv broadcasts.

31
Q

Rule 164: Use of a FWP

A

The FWP may be used by the issuer or any other offering participant.

32
Q

FWP Content

A

May include new info not in prospectus, but it can’t conflict with registration statement.

33
Q

FWP Filing Requirement

A

Must be filed with SEC no later than the date of first use.

34
Q

FWP Use: Non-Reporting or Unseasoned Issuer

A

Can be used if accompanied or preceded by a prelim. prospectus.

35
Q

FWP Use: Seasoned or WKSI Issuer

A

Does not have to provide a copy of the prelim. prospectus.

36
Q

FWP: Media Report

A

Media Report is a FWP if the broadcaster is not compensated by the issuer. Issuer has 4 days to file copy of broadcast w/ SEC.

37
Q

Roadshow

A

A presentation about the issuer and offer by company management.

38
Q

Rule 424(a): Prospectus Used Before Effective Date

A

5 copies to the SEC. Filed no later than the date sent to investors.

39
Q

Rule 424(b): Final Prospectus

A

Once registration statement becomes effective, 10 copies of the final prospectus must be filed w/ SEC.

40
Q

Rule 427: Contents of Prospectus After 9 Months

A

Rule 427 prohibits information older than 16 months from appearing in a prospectus more than 9 months after the effective date.

41
Q

Rule 430: Prospectus Use Prior to Effective Date

A

A prospectus meets statutory requirements during the post filing, pre-effective date - provided it contains substantially the same material as the final prospectus.

42
Q

Rule 430A

A

Allows retroactive insertion of pricing info into prospectus within 15 days of effective date.

43
Q

Rule 430B

A

Allows omission of certain info from shelf registration prospectus that is not known at the time of filing.

44
Q

Rule 134: Communications Not Deemed a Prospectus

A 
Provided a registration statement has been filed:
General factual info.
Info about securities being offered.
Intended use of proceeds.
Underwriter info.
45
Q

Rule 163: FWP Exemption for WKSI

A

Pre-filing communications do not constitute a FWP.

46
Q

Rule 168 and 169

A

Company does not have to cease normal communications during registration statement filing.
Only available to issuers.
Rule 168 exempts regularly released forward looking info.

47
Q

Rule 137

A

Exempts research reports by non-participating broker dealers.

48
Q

Rule 138

A

A participating broker dealer can publish research reports about different securities than the offering for the same issuer.

49
Q

Section 11 of the Securities Act: Civil Liabilities - False Registration Statement

A

Allows any purchaser to sue for damages,

50
Q

Persons Jointly or Severally Liable Under Section 11

A

Signers of the statement.
Officers and Directors.
Accountants and Professionals.
Underwriters.

51
Q

Exemptions From Liability

A

Resignation before the effective date and notification of the issuer and SEC.
Misleading info unknown to the person.
Undertook reasonable investigation.

52
Q

Damages Under Section 11

A

Maximum damages are is the offering price of the security.

53
Q

Section 12: Liability Concerning Communication

A

Anyone who uses a prospectus or oral communication containing misrepresentation is liable.

54
Q

Liability Regarding a Violation of Section 5

A

Anyone who violates any provision of Section 5 is liable.

55
Q

Rule 412: Modifying or Superseding Documents

A

Making a modifying or superseding statement is not deemed an admission of guilt.

56
Q

Section 23: Unlawful Representation

A

Makes it unlawful to represent to an investor that a statement is free from misrepresentation simply because it has been filed with the SEC.

57
Q

Reporting Size Threshold

A

Even if not traded on a national exchange, a company must register with the SEC if it has more than $10 million in assets and 500 shareholders.

58
Q

Exchange Act Sectio 12(J)

A

Allows the SEC to deny, suspend, or revoke a company’s registration of it has failed to comply with the exchange or its rules.

59
Q

Regulation FD

A

Prohibits the selective disclosure of material nonpublic information.

60
Q

Reg. FD: Intentional Disclosures

A

Must be disclosed to the public at the same time.

61
Q

Reg. FD: Unintentional Disclosures

A

Must be disclosed to the public within 24 hours or before the next trading session.

Series 79 - Version of Detailed Subsections of Chapter (16 decks)

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