Series 24 Session Three Flashcards
Name the 6 types of offerings.
1) primary
2) secondary
3) combination
4) IPO
5) Additional issue
6) Rule 415 - shelf registration
Self registration is valid for how many years?
2 years
Self registration is valid for how many years for well-known seasoned issuers?
3 years
What are the requirements to be considered a well-known seasoned issuer (WKSI)?
$700 million in equity; $1 billion in debt
All or none and mini-maxi are what type of underwriting?
Best efforts
In western underwriting, how are unsold shares handled?
Westerns underwriting is divided. The member has liability only for their unsold share
In eastern underwriting, how are unsold shares handled?
Eastern underwriting is undivided. All members shares in unsold shares according to their percentage of participation.
When can a selling group be formed?
after filing a registration statement
What are two components of the selling group agreement?
estimated price and concession amount
What form is required to register a new issue?
S-1
How long is the cooling-off period for a new issue filing?
20 days
What are the prospectus delivery requirements for an exchange listed IPO?
25 days
What are the prospectus delivery requirements for a non-exchange IPO?
90 days
What are the prospectus delivery requirements for an exchange listed APO?
N/A
What are the prospectus delivery requirements for a non-exchange APO?
40 days
B/Ds not participating in the underwriting may publish research on a new issue if what?
If the report is published in the normal course of business and the firm receives no compensation directly or indirectly from any participant of the underwriting.
B/Ds who are participating in a new issue can publish research on what type of securities?
nonconvertible debt/nonconvertible preferred stock
B/Ds can publish research on additionl issue offerings (actively traded security) if
1) it is contained in a publication distributed regularly 2) includes a comprehensive list fo all securities being recommended 3) current recommendation is no more favorable than in the past.
Who are considered restricted persons?
1) member firms and employee
2) finders and fiduciaries (CPAs, etc.)
3) portfolio managers
4) owners of 10% or more including family members
5) immediate family of any of the above.
To testify that they are not a restricted person, a letter of representation must have been received within how many months prior to the sale?
12 months
The initial affirmation must be positive affirmation or negative consent?
positive affirmation
Annual re-affirmation must be positive affirmation or negative consent?
negative consent
When indications of interest are low, the syndicate manager may sell to purchasers otherwise restricted. This is known as what?
standby purchase
If standby purchase is allowed what two components are required?
1) the standby purchase must be outlined and disclosed in the prospectus
2) sale is subject to 3-month lock-up
The standby rule does not apply to employees of firms engaged in the sale of what two security types?
DPPs and investment company securities
State exemptions if what happens?
80% of business assets in the state;
80% of the revenue in the state;
80% of proceeds of the issue are in the state;
100 % of purchasers are residents of the state.;
9-month resale restriction
What are the dollar requirements of Reg A offerings?
$ 5 million or less in 12 months
What is the limit of accredited investors of a private placement?
No limit. You can rip off all the rich people you want
What is the limit of non-accredited investors of a private placement?
35
What constitutes an accredited investor?
Net worth of more than $1 million; income of more than $200,000 or income of more than $300,000 of family income
How long must a private placement be held before resale?
6 months
Private placements are exempt from registration is
1) Form D has been or will be filed.
2) Does not exceed $5 million
3) no non-accredited investors
4) no advertising
Private placements can be offered online. How?
online questionnaire to qualify investors; once qualified, a password is provided
Securities distributed off-shore by US issuers need not be registered with the SEC under what conditions?
1) the offer and sale is made in an offshore account
2) there are no directed selling efforts in the US
3) cannot sell to anyone in the US
4) must stay outside the US for 12 months
What are restricted securities?
securities received from other than a registered public offering.
What is the hold requirement for both control and non-control stock?
6 months
Volume limitations apply to what?
all control stock
Form 144 is good for how many days?
90 days
Form 144 is filed with which agency and when?
filed with SEC no later than sale date
Filing Form 144 is waived if amount to be sold is less than how many shared and what value during what period of time?
5000 shares or less; value of less than $50,000; in a 90-day period
SEC Rule 10b-13 says tender offers must be open for how many business days?
20 business days
While the tender offer is open, one cannot buy what three things?
stock, convertibles or options
No short tendering. True or False
True
Amendments are open for how many days following the change according to SEC Rule 10b-13.
10 business days
SEC Rule 10b-18 says transactions on any given day can only be effected through how many market makers?
One
Transactions on any given day cannot exceed what percentage of average daily trading volume (ADTV)
25%
Transactions cannot affect the opening or closing of a security. True or False?
True
Safe harbor is available if the issuer is not involved in the first trade of the day or any trade in the last half hour of trading. What is the time period for issues with ADTV value of what amounts?
$1 million or more and a public float value of $150 million or more
the price can be no higher than what?
the highest current independent bid or last sale
When member firms are selling their own securities, can employees buy? why or what not?
Yes. considered issuer directed sales
When member firms are selling their own securities, who is engaged to price the IPO?
an independent underwriter
When member firms are are selling their own securities, what type of permission is required for discretionary accounts
written permission
When member firms are selling their own securities, how are customer checks handled?
in escrow pending net capital computation
Corporate Finance Department (CFD) requires filing of information related to what?
fairness of underwriting compensation
The manager files information within how many business days of filing the registration statement.
Within 1 business day
CFD considers what type of securities as unreasonable?
1) stock, options, or warrants of more than 5 years
2) options or warrants with exercise prices below public offering price (POP)
The underwriter can be reimbursed for expenses if what?
these are typically paid by the issuer
With insider trading, both the tipper and tippee are liable only if what?
if the info is used to trade for profit or avoid a loss