Missed Qs Flashcards
The spread is the difference between the price paid to the issuer by the underwriter and the public offering price. If the issue were receives $9 per share and the public offering price is $10 per share, how much is the spread?
1$
Initial public offerings are made ____ initially. Once the offering is complete, the shares are generally listed on ______
OTC initially - not on exchanges until offering is complete
Prospectuses cannot be used for more than _____ months without revision and cannot contain information older than_____ months
9 months and 16 months
A listed company has asked a broker dealer to buy its own shares in the market under a treasury stock repurchase plan. Inside market in the stock is $15.00-15.25. The last reported sale of the stock occur at $15.10- at what price can the stock be purchased?
$15.10 or lower because the last reported sale is 15.10 and this is the higher than the current independent bid of $15. The stock can be purchased at 15.10 or lower.
A broker dealer that is a member of a syndicate may purchase the securities in the market for its own account during the underwriting period ______
Under no circumstances
They can buy it when the syndicate is disbanded
A “_____” is a firm that finds a company that wishes to go public and introduces that firm to an underwriter
Finder
Finders are deemed to be industry “insiders” and cannot be compensated with _______
IPOs of common stock
A web front can be used to make an online offer of a private placement under reg D only if ____
Access to the site is password protected
Thats bc they need to be prequalified that ensures they are accredited - this is not a self- accreditation because the SEC does not allow this- the BD must perform due diligence to make sure they are verified
An issuer has filed an S-1 registration statement for an IPO. During the cooling off period the underwriters have found unexpectedly high investor demand for the issue. The issuer would be required to file an amended S-1 for the offering if the size was increased by ____
20%
(Basically more than the 15% for the green shoe clause)
The basic rule is that there is a_____% limit on underwriting fees or anything similar or related
10%
There is a____% limit on offering expenses that are reimbursed from the proceeds of the offering
5%
The maximum amount that can be raised under Regulation crowdfunding is:
$5 million
The maker of a takeover offer must be concerned with which regulations?
SEC rule 145, SEC regulation MA and Hart Scott Rodino act
_________ is designed to improve corporate auditor independence, speed up corporate reporting of significant events and reports of trades, to minimize conflicts of interest between a broker dealers research departments and corporate issuers, and between a broker dealers research department and it’s investing department
Sarbanes Oxley
If a new issue is “hot” an issuer may NOT direct sales of that issue to:
Finders, member firms, fiduciaries and institutional portfolio managers who wish to buy personally
Finders are basically security industry insiders, which makes them prohibited
A financial advisor wants to sell an IPO to a retail customer. IPOs can be offered to customers who:
Only be offered to customers who in the past 12 months have signed a representation that they are not restricted from buying IPOs
Does verification must be retained for three years by the member firm
An underwriter participation in an eastern account underwriting is completed when:
The managing underwriter terminates the syndicate
An ISSUER can direct shares of a “new” issue to everyone except _____ of the UNDERWRITER
Employees
The FINRA corporate financing rule allows an issue of securities that are “hot” to direct sales of that issue to a:
Divisional President of the issuer
Sale of the issuer shares to FINRA members, their employees, finders and fiduciary are all prohibited under the FINRA IPO rule- the only exception here is if it is the IPO of a privately held FINRA member firm that is taking itself – in this case, the officer is an employees of the firm can buy the shares
Under rule 144, a member holding a sell order for “144” shares may solicit:
The issuer for purchase of its outstanding on registered securities
It makes no sense for a member holding a sell order to contact another individual who wishes to sell – he wants to find someone to buy the stock
Which business form does NOT permit flow through of gain and loss to owners?
Mutual funds regulated under subchapter M
An underwriter is offering common stock of ABC corporation in a primary distribution. ABC is a newly formed company that has never had registered shares outstanding. A dealer who subsequently sells ABC stock in the secondary market, must furnish a prospectus to any purchaser for:_____ days
90 days following the effective date
Under SEC rules, a customer is considered to be ______ only to the extent of his _______ position in a security. It makes no difference that the positions are split among different accounts at the brokerage firm.
Long ; net long
The SEC defines a graphic communication as a written communication. The SEC list of graphic communications includes any form of electronic media, including videotapes, audio, tapes and facsimile, CD ROM, electronic mail, Internet, websites, and computer networks. ; these are also called:
Free writing prospectuses
If a member firm changes it designated principle responsible for overseeing the firms, AML program, what needs to happen?
FINRA must be notified promptly via the FINRA Contact system no later than 30 days
FINRA dues are based on an annual membership_____, and annual fee per______, an annual fee per________ and a percentage of all______ securities income of the member and income exchange trades
Based on an annual membership fee, an annual fee per branch office, an annual fee per registered individual, and a percentage of all over the counter transaction income of the member and income from exchange trades
A registered representative who has been called for active duty, can share commissions during the period of military service with another representative at the same firm if:
They handle that representatives customers, and they have to be at the same broker dealer
If a broker dealer finds that information filed in its Form BD is inaccurate or incomplete for any reason, it must amend the filing_______
Promptly
If it registered person terminates association with a broker dealer, firm, and reassociate after two years of termination, that person is subject to the regulatory element of continued education on a cycle based on_______
Based on reassociation a.k.a. the most recent registration date
SIPC logo is required to appear on ________ written communications by a BD
Advertisements
Under FINRA rules, repurchase agreements between members or members and their customers are ______ only if the securities that are the subject of the agreement are exempt
Permitted
Exempt securities include government, muni’s, agency
Under the investment company active 1940, distributions must be distributed_____
Annually
Once mutual fund physicians have been held for 30 days, the SEC permits them to be sold on margin at ____% loan value
50%
Investment advisors must register with the ______
SEC
Under the FINRA conduct rules, the maximum sales charge that can be imposed on a single purchase of a variable annuity is________
An amount that’s fair and reasonable
Closed end funds are _______ from redeeming their shares
Prohibited
To retire shares, the company would have to announce a tender offer or buys its shares back
A pre-recorded phone call that informed the recipients of general market conditions is an example of what type of communication?
It is technically retail communication, but is managed in the same manner as Correspondence
If a register representative wants to post business related static content on social media, this communication requires:
Approval by principal prior to use
This is because since it is static, it means it will be available for the long-term, meaning it can be seen by a large number of individuals and that is retail communication and that requires preapproval
True or false: 12-b1 fees cover costs of mailing prospectuses to current clients
False
Mailings to current shareholders are not deductible under this plan because it is not aimed at increasing the size of the investor base in the fund since they are already clients
It would cover it if they were potential clients
A registered representative can borrow money from a customer that they have an outside business with that’s shared 50/50 IF:
As long as the member firm is notified in writing and the member preapproves
In a business continuity plan, the member must provide the possibility of significant business disruption, and how the member plans to respond to events. It must also include a plan recovery time from each scenario and whether it plans to continue in business during the scenario.
Does it need to provide the contact information of the plans to emergency contact people?
No
These individuals are provided to FINRA, not the customers
A Nasdaq stock that is treated outside of regular market hours where the trade is required to be reported that day will be reported to the tape with a _____ modifier
“t” modifier
A customer that is placing an order to buy 1000 shares of the stock at $16.111 would be _____
Rejected bc you can’t accept sub-penny orders on $1 or more
An ADR is secured by shares of a_______ company, and then the ADR is listed and trades in the US market
Foreign
TRF reports trades of Nasdaq listed issues in the _____
ADF
Under the provisions of the Uniform Practice Code, if a buying broker dealer receives a partial delivery of 200 shares out of a round lot purchase of 500 shares, the buying broker dealer must:
Accept partial delivery
They must accept it as long as it is in round lots, and the member must set up a fail to receive for the balance of securities that have yet to be delivered
If a firm has received a limit order to buy stock for a customer, the firm may ____
Sell bc it’s not competing with that customers order
An order that can be executed at multiple price levels is termed a___order
Sweep
In a falling market, open _____ and _____ will be executed
Open buy limits and open sell stops
(OBLOSS)
True or false: Reg SHO applies to trades that are agreed to in the US, even if it doesn’t take place in a US market and is subject to the documentation requirements
True
Order tickets must be filled out ____ to order entry
Prior
Form 13G is typically filed by _____ investors
13D is typically filed by _____investors
Passive ; active
Upon execution of a MMPO (market maker peg order), the market maker must :
Submit a new peg order
A mutilated security is considered a good delivery if validated by the ______
Issuer or transfer agent
If a market maker attempts to lock the market during Nasdaq operating hours, the system will :
Route the order for execution at the locking price
Marks to market can only be claimed by the _____ part
Unsecured
Market peg order to buy tracks the national best ___
Offer
Tape recordings are kept for ____ years
3 years
SMA is the same name as ______
Market value
The 5% policy is part of the ___
FINRA conduct rule
If ands choose to compute the reserve requirement monthly, the deposit is ____%
105%
The ____ enforces the cold calling rules
FTC-
