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Series 53 > chapter four > Flashcards

chapter four Flashcards

1
Q

Securities Act of 33

A

provide information to investors
requires registration with SEC
Muncipal and government issues are exempt from registration

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2
Q

Main provisions of Securities act of 33

A
  1. All nonexempt new issues to be distributed interstate be registered.
  2. An issuer provides full and fair disclosure about itself and the issue.
  3. Issuer make available all material information for an investor to judge the issues merit
  4. regulations exist for the underwriting and distribution of primary and secondary issues.
  5. provisions for criminal penalties for fraud in new securities.
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3
Q

SEC Rule 15c2-12 Official statement

A

for issues of 1 million or more an underwriter must review an official statement.

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4
Q

MSRB rule g-32

A

requires brokers to use msrb gateway and submit the official statement if it exists.

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5
Q

Event notices

A

prior to purchasing securities the syndicate must have assurances in writing that the issue has in place a means to provided event notices to bondholders. If there is a cusip the notices must go to EMMA.

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6
Q

Continuing disclosure agreement

A

for market transparency BD’S obligated to submit issuer info to EMMA must note whether the issuer or other obligated person has agreed to provide continuing disclosure. This would also include the date by which annual financial information is contractually due to be submitted.

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7
Q

Events requiring notice

A

Payment delinquencies
Rating Changes
Bond Calls
unscheduled draws on debt service reserves.

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8
Q

Official Statement distribution

A

Must be sent upon request for 90 days after secondary market trading begins or until copies are publicly available from a NRMSIR. can be no less than 25 days

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9
Q

Exceptions to the Official Statement distribution requirements

A

1000 face

  1. sold to no more than 35 persons
  2. matures in 9 months or less
  3. putable every 9 months or less

also if the issuer has less then 10 million in outstanding securities they are exempt.

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10
Q

reoffering yield

A

Price

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11
Q

firm commitment

A

competitive bids are submitted as firm commitments

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12
Q

Underwriting

Cover bid

A

next best bid on the issue. If the winning syndicate doesn’t come through the syndicate with the cover bid will get the issue.

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13
Q

Commitment wire

A

Sent by syndicate manager notifying members of the award being issued.

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14
Q

returning good faith money to syndicate members

A

upon receipt of the good faith deposit the losing syndicate manager must return the funds in two business days.

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15
Q

Most revenue bonds are issued through what type of underwriting

A

negotiated.

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16
Q

Eastern Accounts are

A

undivided

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17
Q

Breakdown of the spread

A 
also called total spread is comprised of
Concession
Additional Take down
Underwriting Fee
Managers fee
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18
Q

Syndicate members get the

A

Total Take down

which is made up of the concession and additional take down

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19
Q

Distributing left over underwriting proceeds

A

If funds remain each member receives a percentage of the funds based on there % of participation.

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20
Q

selling to the selling group

A

They get the concession. Note a syndicate member not just the manager can sell there shares to the selling group and make a profit. I.e. the syndicate member would still get the additional take down

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21
Q

All or none solicitation restrictions

A

A dealer can’t solicit indications of interest as an all or none if that’s not actually part of the offering. does not apply if the firm has made a firm commitment.

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22
Q

Joint Account

A

also called a syndicate is normally used to distribute the securities.

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23
Q

selling at the market rules

A

May not represent that securities are offered at the market Unless the dealer knows or believes that a market exists outside of the one made, created or controlled by the syndicate.

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24
Q

date of sale

A

Competitive - the date the bid is awarded is the date of sale
Negotiated - the date the final contract to buy is signed by the syndicate

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25
Q

Order Period

A

the time set by the manager during which the syndicate solicits customers for the issue. Usually lasts a few hours after the award of the issue.

26
Q

Underwriting Period

A

begins with submission of an order to the syndicate to buy securities or purchase securities from the issuer. Ends when issuer delivers the securities or the syndicate no longer retains unsold balances whichever is last.

27
Q

Priority provisions distribution

A

Must be sent to all members prior to the first offer of any securities by the syndicate, if there is a presale period it has to be before the presale period begins.
Must be in writing and signed by each member

28
Q

Allocation Priorities

A

Presale
Group net
designated
Member at the takedown

29
Q

allocation must be done within

A

24 hours of sending the commitment wire

30
Q

Written summary of all allocations of securities given priority over member take down orders must be sent

A

within 2 business days.

31
Q

Syndicate manager account rule

A

Must send accounting of syndicate expenses to each member at or before settlement of the account

  1. Itemized statement showing nature amount of all expenses incurred
  2. A summary showing identity of each related portfolio which securities were allocated along with par and maturity
  3. identity of each person submitting a group order that was allocated.
32
Q

designated order

A

required to disclose to syndicate members all information on designated credits within 10 business days of sale excluding customer identity.
any take down directed to a member by the issuer must by 15 days following the date of sale or 3 business days following receipt of notification of the takedown.

33
Q

designated credits

A

must be distributed to the appropriate member within 10 calendar days after the issuer delivers the securities.

34
Q

a Dealer can accept payment from the public when participating in a distribution if

A
  1. It is a firm commitment
  2. the money is transmitted promptly to the persons entitled to it or
  3. The distribution is being done all or none and the money is put in escrow
35
Q

Fees that must be disclosed prior to date of sale

A

discretionary fees for clearance costs and management fees .

36
Q

Identity Disclosure

A

When a group order is submitted the identity of the person is submitted. No other orders require identity

37
Q

Related portfolios

A

must disclose the order is for a related portfolio and the order is designated as member status.

38
Q

Documenting a financial advisory relationship

A

must be documented in writing before, upon or promptly after its inceptions and will establish the services rendered and fees.

39
Q

Financial advisers acting as underwriters

A

if acting as a financial adviser the firm can’t participate in the underwriting.

40
Q

Remarketing

A

Remarketing is commonly used by issuers in connection with changing financing from variable to fixed rates. typically on revenue bonds.

41
Q

FA acting as remarketing agent

A

A BD acting as a financial adviser with an issuer can’t be a remarketing agent unless they disclose in writing.

  1. there may be a conflict of interest
  2. the source and basis of the remuneration the broker dealer could earn as the remarketing agent.
42
Q

Corporate affiliation for an FA

A

not a bd and the bd acquires the issue or arranges acquisition has a control relationship with the FA must disclose in writing to the issuer before acquisition

43
Q

FA Relationship client disclosure

A

in writing at or before completion of the transaction.

44
Q

Legal Opinion

A

done by the bond council

45
Q

unqualified legal opinion

A

states the opinion is given without question or restriction.

46
Q

Qualified legal opinion

A

expresses reservations about the issue

47
Q

LEgal opinion taxes

A

will state the bond attorneys opinion about federal and state taxes related to the issue

48
Q

Attaching legal opinion

A

must be attached or printed on the back of each bond certificate

49
Q

Underwriters Counsel

A

retained by the managing underwriter. They will provide the 10b-5 certificate saying it complies with the SEC anti fraud rule

50
Q

Forwarding issuer communications

A

May provide list to issuer to forward
Can request additional copies if need
not required to send outside the U.S.
can send to the owners adviser

51
Q

Spread disclosure

A

must be disclosed to the issuer in a negotiated offering. Does not need to be disclosed in a competitive underwriting.

52
Q

Primary Market data that must be submitted to EMMA

A 
Issuer name and issue description
Cusip service bureau issuer name, description and state
Total par value
dated date
Expected closing date
Formal award date and time
first execution date and time
if securities are advance refunded.
53
Q

NIIDS

A

New information dissemination system
Operated by DTCC
collection of standardized electronic files of new issu info and disseminated in real time to information vendors
each BD must register to use NIIDS prior to being an underwriter

54
Q

Underwriting Assessment

exception

A

maturities of 9 months or less short term debt, also called commercial paper.
Municipal fund securities

55
Q

Depository eligible

A

must apply to DTCC to make the issue depository eligible within 1 business day after the award date.

56
Q

Secondary Credit Enhancement

A 
Letter of Credit
Insurance with respect to debt service
put option
prerefunding
IF the enhancement doesn't apply to all of the issue new cusips must be assigned.
57
Q

who isn’t a MFP

A

representatives who activities are limited to sales with natural persons and clerical functions.

58
Q

MFP contributions

per election

A

You can donate to a preliminary and then a primary elections.

59
Q

form g-37

A

used quarterly to report contributions made to officials

60
Q

Automatic exemption to the two year contribution ban .

A

BD discovered the contribution within four months
does not exceed 250
contributor obtains a return of the contribution within 60 days of discovery
ONly two in a year and only once per employee

61
Q

g-37x

A

filed to exempt the BD from rule g-37 when no municipal business has been done in eight consecutive months.

62
Q

Consultant Compensation

A

No firm may pay someone not associated with the firm for soliciting municipal securities business.

Series 53 (19 decks)

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