S-79 Packet 2 Flashcards
How long are investors required to hold stock in C or S-Corp in order to receive favorable tax rates
1 yr
Master Limited Partnerships are likely listed on..
an exchange
What information is included on a registration statement?
- Issuer description of business 2. use or proceeds 2.) cap table 3. underwriter names and compensation 3.) officers, directors and 10% shareholders
What are the time limit requirements for re-filing outdated registrations?
130 days for season issuer or larger / 135 days for smaller issuers
What is it called when an issuer discusses transaction after the decision to go public but before an issuer files a registration statement?
Gun-jumping
What are blue-sky laws?
State securities laws require issuer/underwriter to be appropriately registered in each state where securities are sold
How long is the cooling off period
20 days
What activities are syndicate members permitted to engage during the cooling off period?
- Tombstone ad 2.) Road show 3.) FWP
Is the prelim prospectus (“red herring”) an offer for securities?
NO!
What is form 424B
A prospectus
When must a prospectus be delivered after the effective date
at the absolute latest of trade confirmation / access = delivery
When must final version of the prospectus be filed with the SEC?
Within 15 days of the effective date
How long is the automatic shelf-registration for WKSI?
3 years
When can WKSI use a FWP?
any-time
When does WKSI pay registration filing fees?
“Pay-as-you-go” (not paid until securities are sold)
When can seasoned, unseasoned and non-reporting issuer use a FWP?
Post-filing
When do seasoned, unseasoned and non-reporting issuer have to pay registration filing fees?
Upon filing
What are the size requirements for a registered issuer per SEC Act of 1934?
1.) 2,000 shareholders 2.) >= $10 Million in assets
What filing includes a company’s market-risk disclosures?
Form 10-K
Where can you learn about a company’s shareholders?
Form 10-K, proxy statement
What event does NOT trigger an 8-K
class-action lawsuit
What is the significance of CEO signing 10K
Signify’s CEO has read the document and document contains accurate information
What Form is required when a person becomes an insider?
Form 3 - within 10 days
What form type is required when an insider transacts in it’s stock / filing deadline?
Form 4 - within 2 days
What form is required for corp. insider change in ownership not via the public market? / filing deadline?
Form 5 - 45 days
What is the time period for not engaging in a short swing profit
6 months or less
What is the form an investor who has acquired 5% of the outstanding stock with the intent to control required to file? / filing deadline?
Schedule 13D / within 10 days
Exam question: 3 investors own 3% of company, agree to vote shares same way - are they required to file a 13D
MUST file a 13D because they are acting together
What is a passive beneficial ownership report form called for a 5% shareholder? / Filing deadline?
Schedule 13G / 45 days of calendar yr end
Who receives proceeds in a primary offering
The issuer
What is the increase to a company’s net worth in a secondary offering
ZERO!
A privately held firm with 2 million shares files an S-1 to register an IPO / firm plans to register 2 million shares of which 1 million is primary and the other 1 mm is secondary. How many shares are outstanding after the IPO
3 mm shares oustanding = Existing + primary
What are competitive bids based on?
Price (ie. municipal bonds)
What parties is the Underwriting Agreement between?
Issuer and lead left manager (underwriter)
Institutional Pot accounts for what % of shares?
60-75%
What is a jump-ball arrangement?
institutional investor receiving the shares assigns credit for the sale to a specific underwriter.
What type of orders are accepted before a stock trades
Limit orders (specific price)
What is the biggest risk a broker faces underwriting an issue where the issuer has a large constitution of shares owned by a few institutional investors
Block trade!
What is purpose of Corporate Finance Dept. of FINRA and transactions do they examine
reviews fairness and compensation of underwriters / equity, High yield and convertible bonds
When must syndicate manager notify CFD once SEC declares a deal effective?
within 1 day of a deal becoming effective
When can Broker-Dealer invest in an IPO?
Only if they agree to do so 1. before the effective date 2.) nobody else wants the shares AND 3. agree to hold for 3 months
Is an issuer allowed to hire its own subsidiary to underwrite IPO?
Yes, BUT also needs a Qualified Independent Underwriter
What is the reference security under Reg-M
Any security in which subject security can be converted.
When can a greenshoe option be exercised?
If issuer price is above POP, within 30 days
What securities are exempt under the Securities Act of 1933?
1.) US government bonds 2.) municipal bonds 3.) eurodollars / eurobonds 4.) commercial paper 5.) commercial bank securities
What securities are NOT exempt?
Mutual funds, ETFs and ADRs
What is Reg-A?
Issues of <=$5 million in a 12 month period (must be aggregated over 6 months) are exempt
What is Rule 147?
Securities registered in 1 state Criteria 1.) 80% of revenue generated from state 2.) 80% of assets in that state 3.) 80% of offering proceeds used in the state - state residents can sell in 9 months
Regulation S? Can U.S. residents purchase?
Allows for offerings outside the U.S. (US residents can not purchase unless they have an overseas address)
What is the seasoning period for Reg. S?
Debt - 40 days
Equity - 6 months
What does Reg D refer too?
clarifies private placements
What investors are considered accredited under Reg. D
1.) Officers and Directors 2.) Institutional Investors 3.) Individual Investors earn > $200K ($300K if married) in past two years or $1M net worth?
Who must non-accredited investors have
Purchaser representative
How many non-accredited investors can a private placement > $1 million have
35 (with purchaser representation)
What type of investors are examples of a private placement?
Angel investors, VC, PE firms, PIPE’s
What type of securities are sold in a private placement?
In preferential order: 1.) preferred stock 2.) common equity 3.) Debt
What is Rule 144 and what is the general holding period?
Permits the sale of restricted stock (ie. any unregistered stock) / holding period of 6 months
Does Rule 144 permit the sale of control stock? Any conditions?
Yes, but 1.) must already have public stock 2.) only to sale unregistered stock of an existing public company
What are the volume limitations for Rule 144?
Greater of 1% of outstanding shares or avg. reported weekly trading volume during the four weeks preceding the sale
Which is greater? 1% of 20 million shares outstanding or the average of last weeks = 37,500
1% of shares = 200K
What party can NOT access the due diligence defense?
Issuer
What is the term for the standard of reasonableness?
Prudent man test
Who is liable for misleading information in a filing
anyone who is involved in the preparation of the filing (issuer, senior mgmt, underwriters, attorneys, accountants who consented to be named)
