New Issue Marketplace for Equities Flashcards
A Regulation A+ Tier 1 exemption is permitted for issuers that raise no more than $__________ over 12 months.
A Regulation A+ Tier 1 exemption is permitted for issuers that raise no more than $20 million over 12 months.
The highest price at which a stabilizing bid may be placed is the ________________________.
The highest price at which a stabilizing bid may be placed is the public offering price (POP).
True or False: Stabilization is designed to artificially raise the price of a new issue.
False. Stabilization is designed to support or keep a new issue’s price from falling.
The holding period for unregistered (restricted) securities under Rule 144 is __________.
The holding period for unregistered (restricted) securities under Rule 144 is 6 months.
Is there a maximum number of stabilizing bids that may be placed?
Yes, one. It is usually placed by the syndicate manager.
Once Form 144 is filed, owners have __________ to sell their securities.
Once Form 144 is filed, owners have 90 days to sell their securities.
True or False: Canadian companies are not eligible to use the Regulation A+ exemption.
False. Both U.S. and Canadian companies are eligible to use the Regulation A+ exemption.
The ____________________ is the disclosure document concerning a Regulation A issue.
The Offering Circular is the disclosure document concerning a Regulation A issue.
A ___________ underwriting is used for shares not purchased through a rights offering.
A Stand-by underwriting is used for shares not purchased through a rights offering.
The Green Shoe Clause allows the issuer to expand the offering by a maximum of ____%.
The Green Shoe Clause allows the issuer to expand the offering by a maximum of 15%.
Accredited investors have net worth of at least $_________ or pre-tax income in each of the last two years of $________.
Accredited investors have net worth of at least $1,000,000 or pre-tax income in each of the last two years of $200,000.
True or False: The SEC judges an offering’s investment merit and provides approval.
False
Indications of interest are _______________ on both the customer and BD.
Indications of interest are non-binding on both the customer and BD.
The ___________ clause gives underwriters the ability to buy additional shares from the issuer to cover over-allotments.
The Green Shoe clause gives underwriters the ability to buy additional shares from the issuer to cover over-allotments.
True or False: If a registration statement has not been filed with the SEC, BDs may not discuss new issue information.
True
In a firm commitment underwriting, unsold securities are retained by ________________.
In a firm commitment underwriting, unsold securities are retained by the syndicate.
True or False: Form 144 must be filed for any sale of restricted or control stock, regardless of the size.
False. If a sale is for 5,000 shares or fewer, and has a market value of $50,000 or less, no notification is required.
Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a _____.
Rule 144A exempts sellers from the holding period and volume limitations of Rule 144 if trading is done with a QIB.
For how long may a new issue be sold under a shelf registration?
Up to 3 years
What does Rule 145 of the Securities Act of 1933 cover?
Registration/prospectus requirements of any reclassification of securities (primarily from mergers or acquisitions).
True or False: Blue-Sky Laws apply to broker-dealers and agents operating within a state.
True
True or False: Receiving shares of a new entity created from a publicly traded company is done through stock dividends.
False. Receiving shares of a newly created entity is done through a spin-off.
What are the requirements to qualify for a Tier 2 exemption under Regulation A+?
A maximum offering of $50 million over 12 months, with no more than $15 million being offered by selling shareholders
Reclassifications, merger or consolidation activities, and transfers of assets are regulated under what provision?
Rule 145
QIBs are financial institutions that have at least $_________________ invested in securities of non-affiliated issuers.
QIBs are financial institutions that have at least $100 million invested in securities of non-affiliated issuers.
What are the requirements to qualify for a Tier 1 exemption under Regulation A+?
A maximum offering of $20 million over 12 months, with no more than $6 million being offered by selling shareholders
In a best-efforts underwriting, unsold securities are retained by ______________.
In a best-efforts underwriting, unsold securities are retained by the issuer.
List the securities that are exempt from registration. 5
- Government/Municipal bonds
- commercial paper,
- bankers’ acceptances,
- bank issues,
- non-profit and small business issues
True or False: BDs and their employees may buy shares of equity IPOs from the syndicate.
False. They are considered restricted.
What type of underwriting is cancelled if the entire issue is not sold?
All-or-None
The final ________ _____ will not appear in a red herring.
The final offering price will not appear in a red herring.
An offering of shares of the issuer and selling shareholders (e.g., officers) is a _____________________ offering.
An offering of shares of the issuer and selling shareholders (e.g., officers) is a combined primary/secondary offering.
True or False: 100% of investors must be state residents to qualify for the Rule 147 intrastate exemption.
True
What is the rule that issuers must follow to qualify for the Rule 147 intrastate exemption?
80% of assets located in-state, 80% of revenue produced in-state, and 80% of proceeds raised are used in-state.
Underwriters that have made a firm commitment to an issuer are acting in a ________________ capacity.
Underwriters that have made a firm commitment to an issuer are acting in a principal/dealer capacity.
What is the difference between a syndicate member and a firm in the selling group?
Syndicate members assume liability, while firms in the selling group do not.
What type of underwriting is cancelled if a specified portion is not sold?
Mini-max
What is the maximum sale allowed under Rule 144?
1% of the outstanding shares or average trading volume over the last 4 weeks - whichever is greater
The private placement disclosure document is the _____________________.
The private placement disclosure document is the Offering Memorandum.
Does Rule 144 require a specific holding period for control stock?
No, but the SEC must be notified when a sell order is placed and volume limitations apply.
What rules govern the registration of an issue in any state in which it will be offered?
Blue-Sky Laws
Though some securities are exempt from registration, nothing is exempt from the ____________ provisions of the Act.
Though some securities are exempt from registration, nothing is exempt from the anti-fraud provisions of the Act.
Are immediate family members of member firm employees always restricted from purchasing equity IPOs?
Not if the individual receives no material support and is not purchasing from the firm employing their family member
According to the Equity IPO Rule, firms must update the eligibility of purchasers ___________ .
According to the Equity IPO Rule, firms must update the eligibility of purchasers annually.
A Regulation A+ Tier 2 exemption is permitted for issuers that raise no more than $__________ over 12 months.
A Regulation A+ Tier 2 exemption is permitted for issuers that raise no more than $50 million over 12 months.
____________ is the only form of price manipulation allowed by the SEC.
Stabilization is the only form of price manipulation allowed by the SEC.
The New Issue Rule covers what new issues?
All equity IPOs
During the registration cooling-off period, what should an agent do if a client sends a check to purchase securities?
Return the check to the customer
True or False: Shelf Registration gives flexibility to the issuer by allowing delayed or continuous sales.
True
Under Reg. D private placement, ___ is the maximum number of non-accredited investors allowed.
Under Reg. D private placement, 35 is the maximum number of non-accredited investors allowed.
Securities issued under the intrastate exemption may not be sold outside the state until ____________ have passed.
Securities issued under the intrastate exemption may not be sold outside the state until 9 months have passed.
May a preliminary prospectus (red herring) be sent during the cooling-off period?
Yes. The red herring is used to obtain indications of interest from potential purchasers.
A new company created from an existing division of a publicly traded parent company is known as a _________.
A new company created from an existing division of a publicly traded parent company is known as a spin-off.
QIB stands for ___________________________.
QIB stands for Qualified Institutional Buyer (QIB).
Besides BDs and their employees, who else is restricted from purchasing equity IPOs?
An employee’s immediate family if materially supported by, or sharing household with, the employee
Underwriters operating under a best-efforts agreement with an issuer are acting in a ________________ capacity.
Underwriters operating under a best-efforts agreement with an issuer are acting in a agency/broker capacity.
