Federal Securities: The Registration Process

Question 1

Requirements and Basic Procedure

Answer 1

1933 Act covers
- IPOs
- Seasoned Offerings
- Secondary Offerings
Basic Procedure
- file with SEC
- 20 days for approval, during which “red herring” disseminated
- deemed “effective” sale can begin
Distribution:
- Product >Manufacturer>Wholesaler>Retailer>Customer
- Security>Issuer>Underwriter>Broker>Investor

Question 2

Basic Legal Framework

Answer 2

Prefiling
- before filing with SEC
- cannot offer to sell
Waiting Period
- waiting on SEC
- oral offers and certain types of written offers, but cannot sell
  - "red herring" prospectus
  - "tombstone ad"
    - Name of Issuer
    - Full title of security
    - Brief description of company
    - Price Range of Security
    - Managing Underwriter
    - Expected date of issuance
    - other minor items
Post-Effective Period
- Issue and sell

Question 3

Contents of Registration Statements

Answer 3

• Audited financials
• names of issuer, directors, officers, underwriters
• risks
• description of issuers business
• description of security and intended use

Question 4

Disclosure

Answer 4

• red herring first

- then real prospectus must be given with securities

Question 5

SEC Review

Answer 5

• seasoned issuers earlier than 20 days
• first time issuer, longer than 20 days
• SEC makes no guarantee of the merits of the security

Question 6

Shelf Registration

Answer 6

• 2,000 largest firms single registration statement covering multiple issuances over next three years

Question 7

Securities Offering Reform Program

Answer 7

• firms are so widely followed that registration statement doesnt add value
• created “well known seasoned issuers”
  
  • reporting for at least 1 year
  • Form S-3 or Form F-3
  • $700 million of worldwide public common equity float
  • or issued $1 billion of debt in last 3 years
    Free Writing Prospectus
• supplement to written and approved prospectus
• emerging growth companies created by jobs act of 2012