Data Collection Flashcards
An investment banking analyst is seeking to obtain detailed information concerning the change of control payment to senior executives. Which of the following documents would be most helpful?
Form 13D
The proxy statement
A merger agreement
A Form 10K
B
Change of control payments refer to compensation that is paid to certain executives if the company is acquired. The SEC requires a company to provide shareholders with a proxy statement prior to its annual meeting which contains information that will be voted on during the annual shareholder meeting. Detailed information in the proxy statement concerning the proposed executive compensation would include potential payments to be made upon termination following the change in control.
Schedule 14D-9, concerning a tender offer, would be filed in which TWO of the following situations?
An officer of the subject company makes comments to employees regarding a tender offer
An investment banking firm will be furnishing information to its customers
A subject company states that the tender offer is under consideration by its board of directors
A hedge fund that owns shares in a subject company makes a recommendation
I and III
I and IV
II and III
II and IV
B
SEC Rule 14d-9 concerns recommendations or solicitations by the subject company and other parties related to a tender offer. The rule requires Schedule 14D-9 or Schedule TO be filed by certain persons such as:
The subject company, any officer or director, employee, or affiliate of the subject company
Any owner of any security of the subject company, the bidder, or any affiliate of the bidder
Any other person who makes a solicitation or recommendation to shareholders on behalf of any of the previously mentioned persons
Exceptions to this rule apply to:
Attorneys, banks, broker-dealers, and investment advisers who are not participating in the tender offer and who are furnishing information only on an unsolicited basis to their customers
The subject company, if it is providing a “stop-look-and-listen communication,” which only identifies the tender offer by the bidder, states that the tender offer is under consideration by the subject company’s board of directors, and states that, on or before a specified date (no later than 10 business days from the commencement of the offer), the subject company will advise its shareholders.
Which TWO of the following entities would be required to file Form 13D with the SEC?
A person who owns 4.0% of the common stock of the Pine Corporation, a publicly traded company, who intends to ultimately acquire a controlling interest in the company
A person who owns 3% of a public company’s common stock and who has just purchased 2.5% of the same company’s stock for the UTMA account of a minor child
A broker-dealer that holds 7.0% of Ykeya Furniture stock in street name for several hundred retail customer accounts
The Scuderia Growth Fund that holds 6.2% of the outstanding shares of Brem Bros. Brakes
I and III
I and IV
II and III
II and IV
Any person who becomes the beneficial owner of more than 5% of any class of equity security registered under the Securities Exchange Act of 1934 must file a statement of beneficial ownership on Schedule 13D with (i) the issuer, (ii) each exchange on which the security trades, and (iii) the SEC. The report must be filed within 10 days after the acquisition. The person described in choice (I) has not yet hit the reporting threshold. If a group of persons acting in concert purchases more than 5% of the security, the group must file in the same manner as an individual. This is why choice (II) describes a person who must file. The broker-dealer described in choice III does not need to file since the firm is not the beneficial owner of those shares. However, the mutual fund in choice (IV) would need to file since the fund shareholders are not the beneficial owners of the securities in the portfolio. The fund is. [60670]
Which TWO of the following documents contain information on executive stock options?
The shareholder proxy
Form S-1
Form 144
10-K footnotes
I and III
I and IV
II and III
II and IV
D
Information on executive stock options can be found in the shareholder proxy and in the footnotes of the annual report (Form 10-K). [60597]
Company XAM is acquiring Company WES. Company XAM will be issuing stock to shareholders of Company WES. Company XAM would file which of the following choices with the SEC?
An S-4
An S-3
A proxy statement
A Schedule TO
A
If securities are to be issued in connection with a merger, an S-4 must be filed by the acquiring company (Company XAM) with the SEC. Since shareholders will need to vote on the proposed merger, a proxy statement must be issued by Company WES. Issuers are permitted to incorporate most of the important details of the merger in the S-4 filings. Since the S-4 must be issued, the information required in the proxy statement will be incorporated into the S-4. The document is sometimes referred to as a proxy statement/registration statement because it is used as a registration statement for Company XAM and a proxy statement for Company WES. The acquiring company, not the target company, issues the S-4. This is an important source of information, detailing the cash and/or stock the shareholders of the target company will receive from the acquirer. Other information included is the purpose of the merger, the tax implications of the transaction, the conditions for the completion of the merger, termination fees (if applicable), whether the target is permitted to solicit other offers, historical financial information, risk factors of the merger, overall business risk of the industry, recommendations of the target company’s board of directors, the fairness opinion rendered by the target’s financial adviser, the merger agreement, and historical price ranges for the common stock of both companies. (74320)
A definitive proxy statement must be filed with the SEC:
At least 10 days prior to being sent to shareholders
Within 10 days of being sent to shareholders
At least 20 days prior to being sent to shareholders
On the same day it is sent to shareholders
D
A definitive proxy statement must be filed with the SEC no later than the date on which it is first sent to shareholders. In certain circumstances, a preliminary proxy statement is also required to be filed with the SEC at least 10 days prior to the date on which the definitive proxy is sent to shareholders. (79563)
The Haley Golf Corporation has 25,000,000 shares of common stock outstanding. George Dallas makes a tender offer and becomes the owner of 1,200,000 shares. George would:
Be required to file both Schedule TO and Schedule 13D
Not be required to file either Schedule 13D or Schedule TO
Be required to file Schedule TO
Be required to file Schedule 13D
B
According to Section 14 (Proxies) of the Securities Exchange Act of 1934, any person who makes a tender offer and becomes the owner of more than 5% of the outstanding shares of a company, is required to file a Schedule TO (tender offer) as soon as practical on the commencement date. In addition, according to SEC rules, a 13D filing is made within 10 days when a person or group of persons acquires ownership of more than 5% of a company’s equity. George’s ownership is 4.8% (1,200,000 / 25,000,000). He does not need to file Schedule TO or Schedule 13D. This type of offering is referred to as a mini-tender offer. The disclosure and investor protection rules would not apply to this type of tender offer. The only applicable rules would be the antifraud regulations, the minimum open tender offer period (20 business days), and the mandate that investors must be paid promptly. [61253]
Westwood Electric Company is making a cash tender offer for the outstanding shares of the Tecova Corporation. If an investment banking representative wants to review the recommendations of the board of directors, she should examine the:
Proxy statement
Schedule TO
8-K filings
Schedule 14D-9
D
SEC Rule 14d-9 concerns recommendations, or solicitations by the subject company and other parties, in a tender offer. The rule requires Schedule 14D-9 to be filed by certain persons such as:
The subject company, any officer or director, or employee of the affiliate of the subject company
Any owner of any security of the subject company, the bidder, or any affiliate of the bidder
Any other person who makes a solicitation or recommendation to shareholders on behalf of any of the above
Schedule 14D-9 is filed with the SEC. A letter from the board of directors addressing its recommendation concerning the tender offer would be attached as one of the exhibits of the Schedule 14D-9.
A Form 4 must be filed:
Within two business days of becoming a director
Within two business days of the date on which a director buys or sells securities
Within 10 days of becoming a director
Within 10 days of the date on which a director buys or sells securities
B
A person must file Form 4 with the SEC within two business days of the date on which an insider changes her ownership position (i.e., buys or sells). An insider is defined as any director or officer of a corporation or any person with beneficial ownership of more than 10% of issuer’s equity securities. Form 3 must be filed with the SEC within 10 days of the date on which a person becomes an insider. (79556)
Insider forms
Form 3, 4, 5
3: becomes an insider
4: insider buys or sells shares. 2 days
5: insider annual filing
Form 4 is filed by any insider of a corporation who buys or sells shares of his company. The form must be filed no later than the second business day following the transaction. Form 3 is filed when a person initially becomes an insider. Form 5 is an annual filing by insiders. An insider is defined as any person who is an officer, director, or owner of more than 10% of the equity. The filings apply to insiders of an SEC registered company. Schedule 13D is used to report acquisitions of more than 5% of the equity of a company. [61291]
A preliminary proxy statement must be filed with the SEC:
10 business days prior to the date the definitive proxy is sent to shareholders
No later than the day the definitive proxy is first sent to shareholders
Within 10 days of the date the definitive proxy is first sent to shareholders
10 calendar days prior to the date the definitive proxy is sent to shareholders
D
In certain circumstances, a preliminary proxy statement is required to be filed with the SEC at least 10 calendar days prior to the date the definitive proxy is sent to shareholders. A definitive proxy statement must be filed with the SEC no later than the date it is first sent to shareholders. (74316)
An investment banking representative is looking for information concerning the private equity business. She has learned that one of the largest PE firms has recently submitted an IPO filing. The BEST source of information would be the company’s:
S-1 Form
Form 3 filings
Web site
13F filings
A
Form S-1 is the registration form that is used for most initial public offerings. It includes all the relevant information concerning the issuer’s business, competition, use of proceeds, risk factors, financial statements, and other important disclosures. Since most private equity firms are not public companies, it is often difficult to find relevant information on this type of business. Form 3 is a filing requirement for insiders of an SEC reporting company. 13F filings apply to the holdings of large investment managers. [60945]
A managing director is working with a client and needs your assistance in preparing financial ratios. The company will be filing its 10-Q in a few weeks, but has just issued a press release with its third-quarter results. To find the most up-to-date financial statements, the investment banking representative would review the:
Most recent 8-K filing
Most recent proxy statement
Most recent annual report
Last quarter’s 10-Q
A
An event that materially affects the issuer’s financial condition, or share price, requires a report to be submitted to the SEC on Form 8-K. One of these events includes the results of its operations and financial condition. The company would include its press release with its financial statements as an exhibit to the 8-K filing. The exhibit would be included with the company’s next 10-Q filing. [61205]
A publicly traded company is going private through a leveraged buyout. Shareholders will be receiving cash for their shares. The issuer has hired an investment banking firm to determine the fairness of the price to be received by shareholders. Which TWO of the following statements are TRUE?
The issuer is required file a Schedule 13E-3 Form with the SEC
The investment bank is required file a Schedule 13E-3 Form with the SEC
Shareholders are required to receive a summary term sheet detailing the transaction
Shareholders are not required to receive a summary term sheet detailing the transaction, since they will be paid in cash
I and III
I and IV
II and III
II and IV
A
SEC Rule 13e-3 applies to going private transactions by certain issuers or affiliates. It involves transactions where an issuer (or an affiliate of the issuer) is purchasing its own common stock and this will likely cause the company to become delisted from an exchange, or to be no longer considered a reporting issuer. The issuer (not the investment bank) is required to file a Schedule 13E-3 with the SEC and make certain disclosures to shareholders. In addition, the issuer is required to file certain information with the SEC, such as reports and opinions by a financial adviser. The issuer will usually attach a summary term sheet along with other required disclosures to the proxy statement. The proxy statement is provided to shareholders. [61053]
According to the Securities Exchange Act of 1934, an institutional investment manager who trades with discretionary authority is required to file a form with the SEC if the holdings are:
Investment-grade bonds valued at $1,000,000 or more
Equity securities valued at $1,000,000 or more
Investment grade bonds valued at $100,000,000 or more
Equity securities valued at $100,000,000 or more
D
Rule 13f-1 of the Securities Exchange Act of 1934 requires quarterly filings when an institutional investment manager exercises investment discretion over at least $100,000,000 in equity securities during any month of the calendar quarter. [60929]
