New Issues Under 1933 Act Flashcards
All type of primary distribution (IPO, private placement, secondary offering) share what feature?
Issuer (usually the corporation) receives the proceeds
What’s a PIPE?
Private investment in public equity – BD helps an issuer distribute restricted (ie unregistered) securities from an issuer that already has publicly traded securities to accredited investors - usually quickly resold
What’s the key requirement of the Securities Act of 1933?
Non-exempt securities must be registered with the SEC and prepare a prospectus. Registration document filed with SEC is a public document
What are the four principal registration forms?
S-1: basic forms used in most IPOs
S-3: short form used by seasoned issuer’s with $75m floated common equity where issuer in good order
S-4: issues as a result of mergers, acquisitions, consolidations etc
S-8: issue through employee benefit plan
What’s the general period for a registration statement to become effective?
20 days. Amendments restart the clock unless they are limited to same class of stock
When can underwriters talk to customers about an issue?
During the waiting period, however they may only take expressions of interest and can’t sell or accept payment
When can underwriters sell an issue?
In the posteffective period only
When must prospectuses be supplied in the secondary market?
Nonreporting at time of issue:
If it will be listed – 25 days after effective date
Will not be listed and not an IPO - 40 d
Will not be listed and is an IPO - 90d
If reporting at time of issue, does not apply
SEC Rule 3a4-1 governs sale of securities by associated person of an issuer. What are the key features?
- no commission or transaction based comp
- not associated with a BD (now or for last year)
- not subject to statutory disqualification
- sells only to financial institutions
- primarily performs other duties
- does it only once per year
What types of issuer can use Form S-3
Well known seasoned issuers and seasoned issuers
Unseasoned issuers and non-reporting issuers have to use S-1
What’s SEC rule 415 / shelf registration?
A registration allowing offerings on a continuous basis (usually 3 years).
Allows distribution when market conditions most favourable.
WKSIs get automatic shelf provisions ASR
What’s an At-The-Market offering?
New securities sold into secondary market at prevailing market price - can be over a period of time not all at once (in contrast to a registered secondary)
What’s a free writing prospectus?
Press releases, emails, marketing materials, term sheets etc used by an eligible issuer (eg WKSI) about an offer that don’t include all details of a statutory prospectus
What types of securities are exempt from the 1933 Act’s registration and prospectus requirements?
- US govt and govt agency securities
- Municipal securities
- Securities issued by nonprofits
- Commercial Paper
- Securities issued by domestic banks and trust companies
- Securities issued by small business investment companies
What are the main types of Exempt Offering?
- Regulation A (new issue of $5m exempt under act)
- Regulation D (private placement)
- Rule 144 (restricted and control stock)
- Rule 145 (mergers etc)
- Rule 147 (intrastate)
- Regulation S (offshore)
What are the main conditions of Regulation D? (private placement exempt offering)
- reasonable belief buyer is a sophisticated investor
- private placement memorandum (same info as a prospectus)
- issuer assured buyer does not intend to make a quick sale (lock up agreement)
- sold to no more than 35 non- accredited investors
