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Series 6 > Regulations of Securities Markets > Flashcards

Regulations of Securities Markets Flashcards

1
Q

Form S-1

A

form submitted to register securities

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2
Q

Primary market

A

where new securities are sold to the public for the first time

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3
Q

Where do proceeds in the primary market go to?

A

The issuer

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4
Q

Where do IPOs and follow-on offerings take place

A

Primary market

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5
Q

Effective date

A

the date the SEC sets for the issue to be sold

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6
Q

Cooling-off period

A

Minimum of 20 days

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7
Q

Rule 147 Intrastate offering

A

securities purchased under this rule may not be sold outside of the state for 6 months

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8
Q

An exempt transaction that is a offering made to investors only in one state

A

rule 147 intrastate offering

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9
Q

investment banker

A

underwriter

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10
Q

underwriter

A

a BD that helps issuers with the public distribution of securites

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11
Q

indications of interest

A

the underwriting firms may collect names of customers who would like to put the new issue during the cooling off period (not binding)

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12
Q

SEC (securities and exchange commission)

A

the ultimate enforcer of federal securities laws, protects U.S. investors

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13
Q

Deficiency letter

A

SEC will issue this if they feel the registration statement is incomplete. the issuer will file an amendment and the cooling off period will begin again

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14
Q

Statutory Prospectus

A

final prospectus, an offer to sell and initial public offering. (for securities, mutual funds and variable insurance products)

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15
Q

underwriting agreement

A

written agreement outlining the underwriter fees and compensation

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16
Q

what is including in the underwriting agreement?

A

POP, underwriter spread per share, net proceeds to be received by the issuer and provisions of the contract.

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17
Q

Dealer

A

firm that acts as a principal, trading for its own account

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18
Q

Who charges a mark up on purchases or markdown on sales instead of being paid a commission

A

Dealer

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19
Q

Cost basis

A

original purchase price of a security, plus any costs associated with that purchase such as commissions

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20
Q

associated person

A

Any person under common control, or any employee of a BD including a RR. (any partner, officer, director, or branch manager)

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21
Q

underwriting spread

A

the difference between the POP and the amount the issuer receives in an offering

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22
Q

this compensates the managing underwriter, syndicate and selling group

A

underwriting spread

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23
Q

equity

A

(STOCK) a security representing financial value in a corporation

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24
Q

Liquidation priority (corporate bankruptcy)

A
  1. secured creditors
  2. taxes, unpaid wages, trade creditors
  3. debenture holders
  4. subordinated debenture holders
  5. preferred shareholders
  6. common shareholders
25
Q

Exempt securites

A

securities that aren’t required to register with the SEC

26
Q

Prospectus

A

document used for corporate securities to provide full and fair disclosure to investors. (must be provided at or prior to confirmation of sale)

27
Q

purchasers of the new security must receive this for up to 90 days following the IPO

A

Prospectus

28
Q

underwriting syndicate

A

members are liable for any shares that remain unsold at the end of the offering

29
Q

securities exchange act of 1934

A

regulates the secondary market including, exchanges, over-the-counter (OTC) market, BDs, and RRs

30
Q

This act created the SEC and allowed for the formation of SROs

A

Securities Exchange Act of 1934

31
Q

Self-Regulatory Organizations (SROs)

A

Regulated the activities of its members through the creation and enforcement of industry rules.

32
Q

Regulates Broker Dealers and Registered Representatives

A

FINRA

33
Q

Regulates municipal securities business

A

MSRB

34
Q

Regulates the trading of options contracts

A

CBOE

35
Q

Issuer

A

any person who issues or proposes to issue a security in a primary offering

36
Q

due diligence meeting

A

meeting held prior to the end of the cooling off period to ensure all parties involved are aware of the facts about the new issue

37
Q

initial public offering (IPO)

A

the first time a corporation sells its stock to the public.

38
Q

secondary market

A

trading of outstanding shares. proceeds from sales go to investor not the issuer.

39
Q

securities act of 1933

A

regulates the primary market and requires registration of new issues

40
Q

The main objective of this act is to provide investors with full and fair disclosure, established laws intended to prevent misrepresentation and fraudulent activities in the sale of securities

A

Securities Act of 1933

41
Q

Restricted Stock

A

stock purchased through a private placement

42
Q

This stock is prohibited from resale in the secondary market for a minimum of 6 months

A

restricted stock

43
Q

Bond

A

company borrowing from investors and agrees to pay interest on the principal for a specified time period

44
Q

Public offering price (POP)

A

the price the public pays which includes the underwriting spread.

45
Q

SEC Disclaimer

A

“no approval clause” - must be displayed prominently on the cover of each prospectus

46
Q

preliminary prospectus

A

the summary of the registration statement files with the SEC

47
Q

what contains the material information about the offering, and the price range

A

preliminary prospectus

48
Q

follow-on offering

A

a company sells additional securities after going public to raise more capital

49
Q

filing date

A

the date at the end of the pre-registration period for a security after the registration statement is submitter to the SEC

50
Q

Tombstone Ad

A

simple ad allowed during the cooling-off period

51
Q

Ad that describes the nature of the offering and syndicate members from whom a prospectus may be obtained

A

Tombstone Ad

52
Q

Private placement

A

an exempt transaction that is not a public offering

53
Q

capitalization

A

total amount of money invested in the entity, including equity and debt

54
Q

accredited investor

A

net worth of 1M, annual income of 200k or 300k with spouse

55
Q

Security

A

an investment contract offered through a legal entity managing the efforts for an expected profit

56
Q

Broker

A

a firm that act as an agent executing orders on behalf of customers, who gets paid a commission

57
Q

broker- dealer (BD)

A

firms who effect transactions in securities for their own account or the accounts of others

58
Q

Selling group

A

BD’s that are invited to participate in the sale of a new issue that do not have the liability for unsold shares.

59
Q

This group receives concession based on the actual shares sold

A

selling group

Series 6 (6 decks)

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