Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

STC Cards > Chapter 6 - New Issue Marketplace for Equities > Flashcards

Chapter 6 - New Issue Marketplace for Equities Flashcards

1
Q

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

A

False

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

List the securities that are exempt from registration.

A
  • Government/Municipal Bonds
  • Commercial Aaper
  • Bankers’ Acceptances
  • Bank Issues
  • Non-profit and Small Business Issues
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Though some securities are exempt from registration, nothing is exempt from the __________ provisions of the Act.

A

Though some securities are exempt from registration, nothing is exempt from the anti-fraud provisions of the Act.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The ________ is the disclosure document concerning a Regulation A issue.

A

The Offering Circular is the disclosure document concerning a Regulation A issue.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Securities issued under the intrastate exemption may not be sold outside the state until __________ have passed.

A

Securities issued uner the intrastate exemption may not be sold outside the state until 9 months have passed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The private placement disclosure document is the ___________.

A

The private placement disclosure document is the Offering Memorandum.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

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

A

Indications of interest are non-binding on both the customer and BD.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

True or False: If a registration statement has not been filed with the SEC, BDs may not discuss new issue information.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What rules govern the registration of an issue in any state in which it will be offered?

A

Blue-Sky Laws

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

True or False: Blue-Sky Laws apply to broker-dealers and agents operating within a state.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

In a firm commitment underwriting, unsold securities are retained by ___________.

A

In a firm commitment underwriting, unsold securities are retained by the syndicate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

In a best-efforts underwriting, unsold securities are retained by __________.

A

In a best-efforts underwriting, unsold securities are retained by the issuer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What type of underwriting is cancelled if the entire issue is not sold?

A

All-or-None

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What type of underwriting is cancelled if a specified portion is not sold?

A

Mini-max

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

A __________ underwriting is used for shares not purchased through a rights offering.

A

A Stand-by underwriting is used for shares not purchased through a rights offering.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

__________ is the only form of price manipulation allowed by the SEC.

A

Stabilization is the only form of price manipulation allowed by the SEC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

True or False: Stabilization is designed to artificially raise the price of a new issue

A

False.

Stabilization is designed to support or keep a new issue’s price from falling

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Is there a maximum number of stabilizing bids that may be placed?

A

Yes, one. It is usually placed by the syndicate manager.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

The highest price at which a stabilizing bid may be placed is the ___________.

A

The highest price at which a stabilizing bid may be placed is the public offering price (POP).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

The New Issue Rule covers what new issues?

A

All equity IPOs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

True or False: BDs and their employees may buy shares of equity IPOs from the syndicate

A

False.

They are considered restricted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Besides BDs and their employees, who else is restricted from purchasing equity IPOs?

A

An employee’s immediate family if materially supported by, or sharing household with, the employee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

An offering of shares of the issuer and selling shareholders (e.g., officers) is a _________ offering.

A

An offering of shares of the issuer and selling shareholders (e.g., officers) is a combined primary/secondary offering.

24
Q

The __________ clause gives underwriters the ability to buy additional shares from the issuer to cover over-allotments.

A

The Green Shoe clause gives underwriters the ability to buy additional shares from the issuer to cover over-allotments.

25
Q

The Green Shoe Clause allows the issuer to expand the offering by a maximum of ___%

A

The Green Shoe Clause allows the issuer to expand the offering by a maximum of 15%

26
Q

For how long may a new issue be sold under a shelf registration?

A

Up to 3 years

27
Q

True or False: Shelf Registration gives flexibility to the issuer by allowing delayed or continuous sales

A

True

28
Q

The holding period for unregistered (restricted) securities under Rule 144 is _______.

A

The holding period for unregistered (restricted) securities under Rule 144 is 6 months

29
Q

What is the maximum sale allowed under Rule 144?

A

1% of the outstanding shares or average trading volume over the last 4 weeks - whichever is greater

30
Q

Once Form 144 is filed, owner have ________ to sell their securities.

A

Once Form 144 is filed, owners have 90 days to sell their securities.

31
Q

Does Rule 144 require a specific holding period for control stock?

A

No, but the SEC must be notified when a sell order is placed and volume limitations apply

32
Q

True or False: Form 144 must be filed for any sale of restricted or control stock, regardless of the size

A

False.

If a sale is for 5,000 shares or fewer, and has a market value of $50,000 or less, no notification is required.

33
Q

QIB stands for __________

A

QIB stands for Qualified Institutional Buyer (QIB)

34
Q

QIBs are financial institutions that have at least $____ invesetd in securities of non-affiliated issuers.

A

QIBs are financial institutions that have at least $100 million invested in securities of non-affiliated issuers

35
Q

Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a _____.

A

Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a QIB

36
Q

Reclassifications, merger or consolidation activities, and transfers of assets are regulated under what provision?

A

Rule 145

37
Q

Underwriters that have made a firm commitment to an issuer are acting in a __________ capacity.

A

Underwriters that have made a firm commitment to an issuer are acting in a principal/dealer capacity

38
Q

Underwriters operating under a best-efforts aggrement with an issuer are acting in a _________ capacity

A

Underwriters operating under a best-efforts agreement with an issuer are acting in a agency/broker capacity

39
Q

What is the difference between a syndicate member and a firm in the selling group?

A

Syndicate members assume liability, while firms in the selling group do not.

40
Q

According to the Equity IPO Rule, firms must update the eligibility of purchasers _________.

A

According to the Equity IPO Rule, firms must update the eligibility of purchasers annually.

41
Q

Are immediate family members of member firm employees always restricted from purchasing equity IPOs?

A

Not if the individual receives no material support and is not purchasing from the firm employing their family member

42
Q

What does Rule 145 of the Securities Act of 1933 cover?

A

Registration/prospectus requirements of any reclassification of securities (primarily from mergers or acquisitions).

43
Q

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

A

Accredited investors have net worth of at least $1,000,000 or pre-tax income in each of the last two years of $200,000

44
Q

A new company created from an existing division of a publicly traded parent company is known as a _______.

A

A new company created from an existing division of a publicly traded parent company is known as a spin-off

45
Q

True or False: Receiving shares of a new entity created from a publicly traded company is done through stock dividends.

A

False.

Receiving shares of a newly created entity is done through a spin-off

46
Q

What are the requirements to qualify for a Tier 1 exemption under Regulation A+?

A

A maximum offering $20 million over 12 months, with no more than $6 million being offered by selling shareholders

47
Q

A Regulation A+ Tier 1 exemption is permitted for issuers that raise no more than $_____ over 12 months

A

A Regulation A+ Tier 1 exemption is permitted for issuers that raise no more than $20 million over 12 months

48
Q

What are the requirements to qualify for a Tier 2 exemption under Regulation A+?

A

A maximum offering of $50 million over 12 months, with no more than $15 million being offered by selling shareholders

49
Q

A Regulation A+ Tier 2 exemption is permitted for issuers that raise no more than $_____ over 12 months

A

A Regulation A+ Tier 2 exemption is permitted for issuers that raise no more than $50 million over 12 months

50
Q

True or False: Canadian companies are not eligible to use the Regulation A+ exemption

A

False.

Both U.S. and Canadian companies are eligible to use the Regulation A+ exemption

51
Q

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

A

True

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

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

54
Q

The final _______ _______ will not appear in a red herring.

A

The final offering price will not appear in a red herring.

55
Q

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

A

Under Reg. D private placement, 35 is the maximum number of non-accredited investors allowed.

56
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

STC Cards (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions