Mod 24 Federal Securities Acts Flashcards
What does IDANCE stand for?
Intrastate Offerings D (regulation D) A (regulation A) No sale transactions Casual sales Exempted securities
Neumonic
IDANCE
Intrastate offerings are exempt from ‘33 act if…3 things
1 issuer must be from that state and do 80% of business in that
state
2 may only be sold to residents of that state
3 resale by purchasers is restricted for 9 months to residents of that state
Regulation D’s 3 different exemptions
504, 505, 506
Regulation D, all 3 must notify…
SEC within 15 days of first sale
Regulation D:
Maximum Dollar Amount Exempt in 1 yr. Under 504
Up to $1,000,000 must be sold in 12 month period
Regulation D:
Solicitation under 504
Permitted as long as sold to accredited investors
Regulation D:
Type and number of investors under 504
Any type of investor and any number
Regulation D:
Disclosure under 504
No disclosure required
Regulation D:
Maximum dollar amount exempt in 1 year under 505
Between $1,000,000 and $5,000,000 must be sold in 12 month
period
Regulation D:
Solicitation under 505
None permitted
Regulation D:
Restrictions of resale under 504
None
Regulation D:
Restrictions of resale under 505
Must hold for long term investment- not resale 2 years or more
Regulation D:
Type and number of investors under 505
Unlimited accredited
35 or less unaccredited
Accredited investors 5
1 banks 2 insurance companies 3 investment co. 4 officer or director of issuer 5 millionaires
Regulation D:
Disclosure under 505
Must disclose to include audited FS if 1 or more unaccredited
investors
Rule 506 under the JOBs Act allows…
General solicitation and advertising if all purchasers are accredited investors
Regulation D:
Maximum dollar amount exempt in 1 year under 506
Private placement of unlimited $ amounts may exceed 12 months
Regulation D:
Solicitation under 506
None permitted
Regulation D:
Restrictions of resale under 506
Must hold for long term investment (not resale 2 years or more)
Regulation D:
Type and number of investors under 506
Unlimited accredited investors
35 or less unaccredited investors
Regulation D:
Disclosure under 506
Must disclose to include audited FS if 1 or more unaccredited
investors
Regulation A
Simplified registration is permitted for small issues up to $5 million
Within a 12 month period as long as you give them an offering circular
No sales transactions
Issuer deals exclusively with existing Stockholders without
Paying a commission (dividends, splits)
Casual sales
2) who’s not exempt?
By ordinary investors are exempt
2) issuer, underwriters and dealers aren’t exempt
Exempted securities 5
Those by…
1 banks 2 governments 3 common carriers 4 nonprofits 5 short term commercial paper (matures 9 months or less)
Tender offers
Offer to buy stock of corporation at specified price for specified time
Proxy solicitation
Must file proxy statements with SEC
and give to all investors
Tombstone ads
Make known the availability of the prospectus
Issuers cannot sell until effective date (under ‘33)
20 days after filing date
Securities do not include…
General partnership interest or CDs
Securities include 7
1 stocks 2 bonds 3 debentures 4 stock warrants 5 stock options 6 collateral trust certificates 7 limited partnership interests
Short swing profits:
A corporation is entitled to recover profits from an insider who…
Sells stock of a company within 6 months of its purchase
Short swing profits:
Profits can be recovered are calculated by…
Matching highest sale price with lowest purchase price found within
Six months
Short swing profits:
Losses cannot…
Cannot be used to offset these profits
JOBS act threshold increase
500 unaccredited shareholders and 2,000 total shareholders
Federal Securities Acts Statute of limitations is earlier of 2 following dates
1 two yrs after discovery is made of fraud
2 five years after violation of securities laws
Form S-1
Basic long form registration statement
The Dodd Frank Act created the…
Financial stability oversight council
Financial stability oversight council is charged with…
Identifying threats to financial stability of the U.S.
Exemptions of smaller emerging companies, what is their size? 2
1 Have common equity float (market cap) of less than $75 million
2 are unable to calculate their public float and have annual revenues
Of $50 million or less
Dodd Frank Act:
The act increased the types of financial companies that could be…
Seized and liquidated by the FDIC to include insurance companies
And nonbank financial companies
Dodd Frank Act:
The act requires previously exempt US and nonUS advisors of hedge funds, private equity funds and other investment vehicles to…
Register with SEC under the Advisors act
Dodd Frank Act:
The act created 2
1 Federal Insurance Office
2 Bureau of Consumer Financial Protection
Federal insurance office regulates…
Insurance companies
Bureau of Consumer Financial Protection regulates…
Offering of consumer products and services (ex. Credit counseling, check cashing)
Dodd Frank Act:
Volker Rule, prohibits any banking entity from…
Engaging in proprietary trading, or sponsoring investing in hedge
Fund or private equity
JOBS Act of 2013 significantly reduced…
The registration and reporting requirements of emerging growth companies
The JOBS act exempt emerging growth companies for at least…2
5 years of integrated audits
and Dodd Frank provisions regarding executive compensation
A company qualifies as an emerging growth company if…2
1 it’s IPO was after December 8, 2012 and
2 it had less than $1 billion of total annual gross revenues during
It’s last completed fiscal year
5% or more owners must file…
Background info with SEC and issuer
Insider trading must report all…
Stock sales to SEC
Insider trading applies to all…4
1 officers
2 directors
3 10% or more owners
4 accountants and attorneys
