Section 12: Federal Securities Regulations

Question 1

1933 Federal Securities Act

Answer 1

• Concerned with the original issuance of securities intended for sale to the public
• Sufficient info is availiable
• Must file:
  
  • Prospectus - Part 1
  • Registration statement
    
    • Basic info
      
      • Names and addresses and amounts held of directors with at leasr 10% of stock
      • Intended use of proceeds
      • Company debt
      • Operating history and pending litigation
    • Financial info
      
      • Audited B/S
      • Audited P&L
• Registration is effective 20 days after filing

Question 2

1934 Act

Answer 2

• Created SEC
• Concerned with ongoing reporting and focuses on secondary offerings

Question 3

SEC responsible for

Answer 3

• Administering federal securities laws
• Regulating brokers
• SOX
• Ability to de-list any issuer not in compliance with SOX

Question 4

1933 Registration must be filed and Prospectus available when… (SPIN)

Answer 4

• offer Securities
• Public issue
• Interstate commerce
• No other exemption is available

Question 5

1933 Exemptions (ACID-BRAINS)

Answer 5

• regulation A - small offerings (<= $5m/12mo/15days/offering circular, can resell/advertise)
• Commercial paper - mature <= 9mo
• Intrastate offerings - 80% of biz in single state
• regulation D - private placement offerings (504, 505, 506)
• Brokerage transactions
• Regualted induatries
• Agencies of the gov
• Insurance contracts
• Not for profits
• Stock dividends and splits

Question 6

Regulation D: 504

Answer 6

• Notify SEC w/in 15 days of first sale
• No advertising to nonaccredited investors
• Resale to nonaccredited investors permitted
• <= $1m
• w/in 12 mo
• Unlimited number of investors
• Financial info given: none

Question 7

Regulation D: 505

Answer 7

• Notify sEC w/in 15 days of first sale
• No advertising
• investment purpose only, cannot resell for 2 yrs
• <=5m w/in 12 mo
• unlimited accredited
• non accredited <=35
• Financial info given:
  
  • accredited = none
  • nonaccredited - audited B/S

Question 8

Regualtion D: 506

Answer 8

• Notify SEC w/in 15 days of first sale
• no advertising
• investment purpose only, cannot resell for 2 yrs
• unlimited $ amount
• unlimited amount of time for issuance
• unlimited accredited
• non accredited <=35
• Financial info given:
  
  • accredited = nothing
  • nonaccredited = audited B/S and represented by accredited person
• Under JOBS acts, general solicitation allowed if all accredited

Question 9

1934: Large Accelerated Filer

Answer 9

• >= $700m FMV of securites
• 10-K = 60 days
• 10-Q =40 days

Question 10

1934: Accelerated Filers

Answer 10

• $700m >= 75m
• 10-K = 75 days
• 10-Q = 40 days

Question 11

1934: Non-Accelerated Filer

Answer 11

• < $75m
• 10-K = 90 days
• 10-Q = 45 days