Series 6 Flashcards
When can a person offer sales from a Reg D?
a. After 6 months upon trade date?
b. After 6 months upon purchase date?
b. After 6 months upon PURCHASE date.
What is found in Tier (Tear) 1 ?
Securities offering 20 million or less; with 6 mil to existing shareholders…..
–in a 12-month period.
Stipulation: must be the accredited investors only “club”
AND
ONLY the SEC reviews (no state)
What is found in Tier (Tear) 2 ?
Securities offering 50 million or less; with 15 mil or less to existing shareholders.
What type of literature is given for Reg A+ securities?
Offering Circular
Who is not allowed in Tier 1 ?
Private Equity Funds Venture Funds Hedge Funds --- They're all poopy pants and get in the "Tier 2" Elite club.
How is Tier 1 reviewed?
By coordination – includes the state & SEC.
How are Small Cap and Mid Cap Securities Registered?
With regulation A+.
What does NII stand for?
Net investment Income
How are NII distributed?
as cash or shareholder may reinvest immediately with no sales charge!
How are cold calls/scripts filed?
As 3 yr customer communications with the BD; and approved by the principal before use.
Short term cap gains are…
1 yr or less
Long term cap gains are…
1 yr or more
Unrealized gains are
Defered or taxed now?
Deferred
Do options provide buyers with leverage?
Yes, it’s better than buying the underlying security.
What does the writer want and hope?
The writer wants INCOME, and hopes the contract will expire before he is obligated (besheww!!! gun blasts) to sell it.
Can you have a class suit in Arbitration?
No way Jose.
Name some Financial information
credit card payments cash at hand (liquid investments) life insurance cash in account collectibles securites
Name some Non-Financial Info
Risk tolerance Emotions about how I feel the market will do Tax status Age Marriage status Gender Birthday Children
Capital Appreciation
Increase in the market shares
TIF
Transfer Information Form
What is a TIF?
A way of tracking $ and ownership of accounts.
What is an unrealized gain?
When an investor holds a security that has increased in value, yet has not sold it. It is unrealized how much money you can get…or turn around to reinvest.
So…you don’t own the “extra” gain, until you actually have it.
What is cost basis?
it’s your capital or money you put in.
So if you bought ABC 90 shares at $100; and paid $100 commission, you paid $9,100. 6 months later you sell them for $96/share. What is your cost basis? and is it short/long term capital gain or loss?
You paid in $90…so that’s your cost basis.
You earned $6; so that’s your short-term capital gain.
The $100 is a “side” note– as an “expense”…so you have to reduce your capital gain by $100.
Final answer:
Cost Basis: $90
Cap Gain: (Short-term): $500
i say….Regulation D you say Private Placement.
i say Reg D…… you say Private placement.
I say Reg D…. you say Private placement.
I say Reg D… you say
Private Placement
What’s so special about private placement?
You don’t have to be registered with SEC!
But it comes with conditions.
What are the conditions to have a security qualify to be a private placement?
Investors have to be accredited. You cant sell to someone who doesn’t have lots of money.
What is an accredited investor? (hint: 1, 2, 3)
Think…1, 2, 3 on your hand.
We’re talking about a Net Worth of….
1 mill or greater (not including primary residence)
or
200,000 single and expects next 2 yrs to do so
300,000 joint if married, and expects to do so in the current year.
Regulation A+ ———–Small and Mid Cap Secur. Regis and No full prospectus required. –
Special rules. and Tiers….
Special rules under SEC for Small and Mid Cap security registration and prospectus EXEMPTION.
Tier 1 [ 20 mil+] Tier 2 [ 50 mil+] -- only offers sales to accredited - Offering Circular No full prospectus required!
So, a financial industry, company, or corporation…may qualify to have an exemption. WHY? to help them raise capital. Oh! ok.
Before Reg A was just 5 mill. Now it’s Reg A+…allowing higher amounts to be allowed for sale.
How many accredited investors can you sale to at once?
35 investors
How do you identify Private placement securities?
Think of these synonyms…
Restricted –
Unregistered –
Lettered Stock –
Legend Stock
Restricted–cuz it must be held for… months
6 months
Unregistered – cuz it qualifies
not needed to be on file with SEC.
Lettered Stock – cuz it sends the terms in a
Letter– the investor agrees by signing it.
Legend Stock – cuz it has a special
Symbol in-scripted on the stock certificate… as “Legendary” so it must be restricted to transfer.
W O W! Ooooo…. Ahhhhh! So awesome!
What’s the 80 80 80 100 tests have to do with?
Intra State offerings… Rule 147
How many of the “80” tests make a the Rule 147 come alive?
Only 1 of them!
What are the “80” tests?
- Issuer has its principal office, and receives at least 80% income IN State.
- 80% of issuer’s assets are IN State.
- 80% of proceeds are used with IN State
Office is IN State
and
All buyers are Residents IN STATE>
Can an INTRASTATE be sold out of state?
yes, but not for 6 months after PURCHASE.
So…how do you tell which way a security is to register?
Pay close attention to the question.
If all Instate… than maybe Exempt…but has to follow 80% rules.
ABC wants to sell 8Mil in WA, and in UT and CA. How does it register?
regular registration with SEC.
What is NOT is a preliminary Prospectus?
effective date
final offering price
Preliminary prospectus may be used for…
gathering indications of interest. Not sales.
Plus…
you can’t have any other form of communication attached to it.
Can you write, highlight, dog-ear a prospectus?
No! it is a legal document. Never ever do this. Treat it like GOLD.
Who is responsible for fully disclosing all maters as dictated by the Securities Act of 1933?
The Issuer, with the help of the underwriter. They file the registration statement with the SEC.
The SEC only reviews the requirements, and says they can sell their security.
