Chapter 7 Flashcards
What does the 33 Act cover?
It regulates the primary market, new issues, and full and fair disclosure. It provides purchasers of new issues of securities (IPO’s etc.) with full and fair disclosure.
Under the 33 Act, what is the minimum waiting period (cooling off period) for new issues?
20 day waiting period. The final prospectus must be delivered no later than with the purchase confirmation.
Under the 33 Act, what is the definition of a security?
stocks, bonds, investment contracts, rights, warrants, fractional interests in oil, gas, and other mineral rights, puts and calls on securities and foreign currencies.
Under the 33 Act, for exempt securities, what are the requirements of a Regulation A offering?
The total amount of the offering to the public is 5mm or less in any 12-month period.
Under the 33 Act, which 2 types of securities are not exempt?
Insurance company and investment company shares.
Under the 33 Act, would an issuer negotiating with an underwriter constitute an offer to sell?
No.
What does the 34 Act regulate?
It’s the people act and regulates the secondary market.
The 34 Act created the SEC and gave it jurisdiction to regulate transfer agents. What do role do transfer agents play?
They cancel old certificates and issue new ones. They do not include clearing agencies. Clearing agencies handle the processing of settlements of securities trades. A registrar maintains the stock record book and must account for all shares.
According to the 34 Act, does the SEC have jurisdiction over national banks?
No.
According to the 34 Act, can the SEC override FINRA, the MSRB, or any national exchange?
Yes.
According to the 34 Act, does the form U-4 need to include an advisor’s educational background?
No.
According to the 34 Act, what are market-makers?
They are dealers that maintain an inventory of OTC securities and are willing to buy and sell for their own accounts on a regular and continuous basis.
According to the 34 Act, what must an order ticket for a securities transaction include?
The account number, time order was received, agent on the account, and terms and conditions of the order. It doesn’t need to include the time of the order.
According to the 34 Act, what must confirmations on bonds disclose?
The purchase price, yield to maturity, and the yield at which the trade was effected. It doesn’t need to disclose the bond’s rating.
What does the Investment Company Act of 1940 cover?
It defines and regulates investment companies.
