Federal Securities Regulations

Question 1

Regulation D Differences

Answer 1

1) Rules 501–503 set forth definitions, terms, and conditions.
2) Rules 504–505 provide “safe harbor” for small offering exemptions.
3) Rule 506 provides an exemption for private placements.

Question 2

If securities are offered and sold and the registration statement contains material misstatements and/or omissions

Answer 2

the investor can sue the issuer for recovery of losses

and the issuer is absolutely liable for all misstatements

Question 3

General Partnership Interests

Answer 3

Are not considered securities under the 1933 act

Question 4

What offerings are exempt under the 1933 Act?

Answer 4

Private placement—the securities are not offered to the public.
Intrastate offerings—securities are only sold within the state where incorporated and all officers are residents of that state.
Small offerings—securities sold up to $2 million within any 6-month period to institutional investors, buyers of $100,000 or more in securities, or the issuer’s officers and directors
Casual sales—sales of securities owned by an investor
Regulation D—a combination of private placement and small offerings (issuers must file Form D)
Sales within a certain period after the initial public offering

Question 5

Under the Securities Exchange Act of 1934, which of the following conditions generally will allow an issuer of securities to terminate the registration of a class of securities and suspend the duty to file periodic reports?

Answer 5

300 shareholders of the class of securities offered
500 shareholders of the class of securities offered and less than $10 million in total assets for each of its last three fiscal years

Question 6

The public sale by a corporation of its negotiable 10-year notes

Answer 6

is subject to registration requirements of the Securities Act of 1933

Question 7

prosecution of criminal violations of federal securities laws

Answer 7

is handled by the Justice Department

Question 8

Exempt securities (1933 Act) includes

Answer 8

Securities of a Bank
commercial paper
government securities
securities of nonprofit organizations
securities of savings and loan associations
securities of common carriers or contract carriers
insurance, annuity, and endowment policies

Question 9

According to Rule 147, promulgated by the SEC

Answer 9

during the 12-month sales period and for nine months thereafter, the securities cannot be resold to nonresidents of the state

Question 10

A tombstone advertisement

Answer 10

makes known the availability of a prospectus

Question 11

Regulation A of the Securities Act of 1933

Answer 11

provides a safe harbor for the issuer with the filing of an offering circular with the SEC