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Series 79 > Series 79 > Flashcards

Series 79 Flashcards

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Series 79 Top-Off Exam flashcards
1
Q

Rule 412

A

A new or amended document supercedes the prior version. Only investors who purchased before the amendment date may recoup the amount of losses.

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2
Q

Rule 10b-18

A

Share buyback safe harbor.
Allows an issuer to buyback their own common stock in the open market, regulated per trading day. 4 key criteria must be met:
1) Dealer - can only use one dealer per day
2) Size - can not purchase more than 25% of ADTV per day
3) Price - buy at the higher of the highest independent bid or last sale price
4) Time - Can’t be first trade of day and can’t trade in last 30 mins (last 10 mins if issuer has $1M ADTV per day)
- Can do 1 block trade a week for unlimited amount
- Must wait 4 weeks after IPO

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3
Q

Research Quiet Periods for Emerging Growth Company

A

No quiet period after IPO or follow-on

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4
Q

Research Quiet Periods for IPO

A

10 days after IPO

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5
Q

Research Quiet Periods for Follow-On

A

3 days for underwriting, 0 days for anyone else

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6
Q

Form 3

A

Filed when person or entity becomes an insider. 10 business days to file.

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7
Q

Form 4

A

Filed when insider changes their position - either via a trade in the market or no longer being an insider. 2 business days to file.

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8
Q

Form 5

A

Annual form. Covers any other change of securities not in the market (i.e. gifts) and filed annually. 45 days within year end.

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9
Q

Short Swing

A

6 month profit from trading insider securities, must be returned to firm

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10
Q

Large Accelerated Filer (Requirements and Filing Times)

A

Greater than $700mm market cap globally (both voting and non-voting)
10-K: 60 days
10-Q: 40 days
8-K: 4 business days

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11
Q

Accelerated Filer (Reqs and Filings)

A

Market cap between $75mm and $700mm
10-K: 75 days
10-Q: 40 days
8-K: 4 business days

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12
Q

Small + Non-Accelerated Filers (Reqs and Filings)

A

Less than $75mm market cap or revenues under $50mm
10-K: 90 days
10-Q: 45 days
8-K: 4 days

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13
Q

10-K (Part 1)

A

Business overview

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14
Q

10-K (Part 2)

A

Numbers and analysis

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15
Q

10-K (Part 3)

A

Management and shareholders

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16
Q

10-K (Part 4)

A

Exhibits and schedules

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17
Q

When is a firm required to register?

A

When it has reached both:
2,000 stockholders
$10mm in assets

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18
Q

Regulation FD

A

Regulation Fair Disclosure - monitors disclosures so main street gets same chance as wall street:
Accidental disclosure - filed immediately after (can’t just be next day, must be immediate)
Purposeful disclosure - filed simultaneously

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19
Q

Sarbanes-Oxley Key Points

A
  • Majority of BoD must be independent
  • Entire audit committee must be independent
  • If financial expert on audit committee, must be disclosed (NYSE and NASDAQ require this but SOX does not)
  • Company cannot give employee loan unless company is bank and it is at fair market terms
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20
Q

Public Float

A

Total shares outstanding - insider owned shares

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21
Q

Well Known Seasoned Issuer (WKSI)

A
  • $700mm market cap
  • Has issued $1bn of non-convertible securities
  • Can not be investment company or business development company
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22
Q

Seasoned Issuers

A
  • $75mm market cap

- SEC filer for 2 years

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23
Q

Unseasoned Issuers

A
  • Less than $75mm market cap
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24
Q

Ineligible Issuers

A
  • Issuers that have filed bankruptcy in last 3 years

- Not current in filing SEC reports

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25
Q

Non-Reporting Issuers

A

Not required to file

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26
Q

Criteria for Emerging Growth Company

A
  • Revenue of less than $1bn
  • No more than 5 years after IPO
  • Cannot issue more than $1bn in secs
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27
Q

Regulation S-K

A

Instructions on filling out forms. Must disclose all offshore revenues for last 3 years

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28
Q

Regulation S-X

A

Form and content of financial statements by qualified and independent auditors

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29
Q

Form S-1

A

Newly listed securities (all IPOs)

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30
Q

Form S-3

A

Short form for seasoned issuers (follow-ons)

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31
Q

Form S-4

A

Used in a merger

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32
Q

Form S-8

A

Employee benefit offering

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33
Q

Form S-11

A

REITs

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34
Q

Rule 15c2-4

A

Funds for contingent offering must be held in escrow until contingency is met. If it is not met, they must be returned to investors

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35
Q

Regulation A

A

Exempt offering of less than $5mm in a 12 month period.
Only $1.5mm allowed to be secondary.
No financial reporting obligations afterwards.
Must report to SEC Reg A activity every 6 months
Must register under state securities laws

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36
Q

Regulation A+ - Tier 1

A

Exempt offering of less than $20mm with $6mm secondary in last 12 months.
Must file offering statement with SEC.
Must provide 2 years of financials (unaudited).
Must register under state securities laws

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37
Q

Regulation A+ Tier II

A

Exempt offering of $50mm with less than $15mm secondary in last 12 months
Must file offering statement with SEC
Must provide 2 years of audited financials to SEC
Must report annual and semiannually
Do not have to register under state securities laws

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38
Q

Rule 147

A

Intrastate offerings. May only offer to in-state investors. If they want to sell securities they have to wait 6 months before selling to out-of-state investors. State is considered by location of principal office

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39
Q

Rule 147A

A

Not required to be incorporated in the state

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40
Q

Reg D

A
  • File Form D within 15 days of first sale

- Three different types: 504, 506(b) and 506(c)

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41
Q

Rule 504 Offering

A

$5mm max offering with unlimited unaccredited investors

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42
Q

Rule 506(b) Offering

A
  • Typical Reg D offering of unlimited raise with max 35 unaccredited investors
  • Accredited investors are also institutions with $5mm of assets
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43
Q

Rule 506(c) Offering

A
  • Update to offering to allow general solicitation and advertisment
  • No non-accredited investors allowed
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44
Q

Regulation S

A
  • Offshore offering, cannot market to anyone living in the US or in the US at all (even if someone is traveling)
  • Residency does not matter
  • Resale: debt after 40 days, equity after 6 months
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45
Q

Rule 144 (Form 144)

A

Must be filed if sale is more than 5,000 shares or $50,000 in the aggregate over 90 day period

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46
Q

Crowdfunding

A

They use net worth and income to determine investments ability. Max limit is $1.070mm, may do it through broker-dealer or a FINRA portal.

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47
Q

Goodwill

A

Purchase price - market value of net assets

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48
Q

ROIC

A

EBIT / Invested capital

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49
Q

AR Turnover

A

Sales / Avg. AR

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50
Q

Inventory Turnover

A

Sales / Avg. Inventory

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51
Q

AP Turnover

A

Sales / Avg. AP

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52
Q

Days Sales Outstanding

A

Avg. AR / Sales x 365

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53
Q

Days Inventory Outstanding

A

Inventories / COGS x 365

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54
Q

Days Payables Outstanding

A

Avg. AP / COGS * 365

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55
Q

Levered Beta

A

= Unlevered beta * (1+ (D/E)*(1-tax))

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56
Q

Coverage Ratio

A

EBIT or EBITDA / Interest Expense

57
Q

Condition to qualify as reporting issuer?

A

Subject to reporting requirements of Section 13 or 15 for at least 90 days

58
Q

Form S vs. Form F

A

Form F is the the version of Form S for foreign companies

59
Q

Rule 415 - Shelf Registration time limit

A

The time limit for shelf registrations is three years after effective date

60
Q

FINRA No-Objection Comment Letter

A

The letter covers the deal, not the underwriter. New underwriter can enter and sell securities

61
Q

Disclosure of Underwriting Relationship

A

Must be disclosed to the client in writing

62
Q

IPO Allocations to Potential Clients

A

Can be permissible as long as there is no investment banking business granted in the next 3 months

63
Q

Regulation M Rule 101 and 102

A

Address notification requirements for offering participants.

  • Make notification to FINRA for distribution of both listed and unlisted securities
  • Required whether or not a restricted period applies
  • Must include basis for determining how long the restricted period is (5 days or 1 day)
64
Q

In a firm commitment underwriting, what happens to unsold securities?

A

Securities go into account of syndicate manager

65
Q

Schedule TO

A

Tender offer. Must be filed if you expect to own more than 5% of shares after tender

66
Q

Schedule 13D

A

Anyone who is above a 5.0% stake must file (voting shares only) - beneficial ownership report

67
Q

Schedule 13E

A

Go private filing

68
Q

Schedule 13G

A

Filing for 5.0% owner passive investor (can still request changes to minor structure)

69
Q

Schedule 14D-9

A

Response to schedule TO - must be filed within 10 business days

70
Q

Rule 13e-4 (tender offer)

A

Must give owners 20 business days from commencement of offer to decide, if size is changed must give 10 more days

71
Q

Dutch Auction

A

Unique form of tender where a range is given and the clearing price is the lowest bid at which company can buy all required shares

72
Q

Q: If an acquirer launches tender offer, where else can it acquire shares?

A

Can not buy shares in open market while tender is outstanding (can buy non-equity linked bonds)

73
Q

What must a BoD upon receival of Tender Offer?

A

respond within 10 business days with form 14d-9. They have three options:

1) recommend acceptance or rejection
2) remain neutral
3) say they are unable to choose a position (and why)

74
Q

Mini-tender offer

A

Less than 5%

75
Q

What fees must be disclosed?

A

The existence of contingency fee must be disclosed, but the amount does not have to

76
Q

Share repurchase cost on balance sheet

A

impacts BS based on acquisition costs

77
Q

Taxation of Cash and PIK interest

A

Both are taxed as ordinary income (PIK accrues over life of bond, taxed even though you do not receive money)

78
Q

Reg M: Securities with no restricted period qualifications

A
  • ADTV greater than $1m

- Public float greater than $150mm

79
Q

Chapter 11 Voting

A

Must have 2/3 of $ value and 1/3 of claimants

80
Q

Timeline for syndicate settlement

A

90 days within settlement date

81
Q

Who must sign the S-4?

A

CEO, CFO, Controller and majority BoD

82
Q

Credit Ratings in registration statements

A

Can include if you wish. If you include 1 and the other is different, must include both

83
Q

What trade can a BD execute during Reg M period

A

Odd lots

84
Q

What may ineligible issuers do?

A

They may issue securities if filed a registration statement

85
Q

Underwriting expense limit

A

10% of gross proceeds

86
Q

What is an affiliate?

A

A corporate insider (CEO, director, 10% shareholder)

87
Q

Chapter 11 - what may a DIP do?

A

They may pay all debts incurred after the filing

88
Q

What is a DIP

A

A fiduciary with trustee powers in a Chapter 11 - court appointed. Protects assets for creditors

89
Q

Who makes up the unsecured creditors committee?

A

7 largest unsecured creditors appointed by US Trustee

90
Q

Section 363 transaction

A

merger or acquisition in chapter 11. must be approved by bankruptcy court

91
Q

In event of bankruptcy, what happens to defined comp plan?

A

Treated on same level as unsecured creditor

92
Q

What level is the attorney for a bankruptcy proceeding o on?

A

After secured creditors but before employee wages

93
Q

Form 13F

A

For filers with $100mm discretionary assets - file 45 days of quarter end

94
Q

QIB vs. Institutional Threshold

A

QIB - $100mm discretionary

Institutional - $50mm discretionary

95
Q

Regulation M restricted period must contain:

A

1) name and symbol of security
2) restricted participants
3) any intent to stabilize or penalty bid

96
Q

SEC disclosure of control relationship

A

Must disclose to the investor verbally (at recommendation) and in writing (before closing)

97
Q

When is WKSI status established?

A

At time of filing

98
Q

DEFM14-A pro forma financials

A

Only required if stock transaction

99
Q

High operating leverage =

A

high fixed costs

100
Q

Proxy Statements

A
  • Preliminary must be filed with SEC 10 days before sent to investors
  • Definitive must be sent to investors 20 days before vote
  • Preliminary only required in event of major event
101
Q

If independent auditor finds issues, what do they do?

A

Report to BoD audit committee

102
Q

Research analyst in bakeoff prep

A

Only for EGC

103
Q

Restricted Periods - Small Company

A
  • ADTV less than $100,000
  • Float less than $25mm
  • 5 days before pricing
104
Q

Restricted Period - Medium Company

A
  • ADTV $100,000 to $1mm
  • Float $25mm to $150mm
  • 1 day before pricing
105
Q

Restricted Period - Large company

A

Actively traded securities

  • Volume > 1M
  • Float > 150mm
  • no restriction
106
Q

Reg M Rule 103 Exception

A

Allows passive market making at best independent bid price

107
Q

Research Analyst Blackout Period prohibits:

A

Any research or public appearances

108
Q

Who is required to receive an offering circular in a private placement?

A
  • a QIB is never required to receive one

- a non-accredited investor is always required to receive one, except in a 504 offering (less then $5mm)

109
Q

FINRA Rule 5130 (who can new issues be sold to?)

A

The clients of an underwriter, not attorney

110
Q

Stabilizing Bid price

A

Must be at the lower of the highest independent bid or the lowest offer

111
Q

When is a distribution deemed completed?

A

When all securities have been distributed and all restricts are terminated

112
Q

Research analyst and IB relationship?

A

Research analysts may never attend road shows or pitches. They may attend diligence meetings for EGC’s only

113
Q

If an IPO trades below POP, how many an underwriter cover overallotment?

A

They are allowed to buy the shares in the open market and sell at POP

114
Q

What is included in ordinary proxy statement?

A

Names of any directors who have not attended 75% of meetings

115
Q

When must a preliminary prospectus be delivered?

A

No later than 48 hours prior to confirmation of sale

116
Q

What is on a Free Writing Prospectus legend?

A

A disclaimer that the issuer has filed a registration statement and prospectus, and the investor should read these before purchasing

117
Q

Economic Profit =

A

= After-tax EBIT - (Discount rate x purchase price)

118
Q

In a stock deal, who prepares the proxy, prospectus and s-4?

A

Both companies

119
Q

What happens to BoD in chapter 11?

A

Board remains intact

120
Q

Policy for recorded road show

A

Must be made publicly available via FWP no later than date of first use. Can differ from one to the next, but must have same core presentation

121
Q

Fairness Opinion review

A

Best practices to have 2 independent reviewers, who are not on the deal team nor influenced by the deal team

122
Q

Valuation analysis to capture difference in Net Working Capital

A

DCF

123
Q

Rule 145 - When must business combinations be registered?

A

When securities holders are asked to vote or give consent

124
Q

Form C (Crowdfunding) Updates

A

Any information must be updated within 5 days upon completing 50% of target raise. Then again within 5 days after reaching 100% of target raise.

125
Q

Rule 147 Offering - When must a purchaser be a resident of the state?

A

When the sale of securities occurs

126
Q

When must a company provide it’s shareholders a prospectus if they are to vote on a transaction?

A

Prior to the vote

127
Q

Rule 145 - When is a registration and prospectus not required?

A

When the offer is for all-cash, only a proxy is required

128
Q

Who is ineligible to use a Form s-3

A

Unseasoned issuer

129
Q

When does final syndicate settlement take place?

A

Must occur within 90 days of issuer delivering securities to syndicate members (this is known as the syndicate settlement date)

130
Q

Money market mutual funds exemptions

A

They are never exempt from registrations

131
Q

Just prior to going public, a streaming media company releases
financial projections for future subscriber growth. Is this a violation?

A

It usually is not a violation for an issuer to engage in normal business
activities prior to an IPO. Examples include publishing regular financial
updates, factual reports and communications involving marketing activities.
However, releasing information that specifically references the upcoming
offering is not allowed during the quiet period. Releasing sensitive or overly
optimistic financial projections also could be problematic.

132
Q

What happens when an issuer requests to accelerate a registration statements effective date?

A

The SEC will review to ensure there is sufficient information and all neccessary disclosures have been made to the public

133
Q

Under Reg M, if a firm wants an excused withdrawal when must they make this request?

A

1 day prior to complete trading session

134
Q

After an IPO, when can a security trade away from an exchange?

A

Only after it has traded on an exchange (no specific time)

135
Q

What are excepted activities under Regulation M?

A
  • Oddlots transactions
  • transactions by closed-end investment companies
  • redemptions of commodity pools
  • exercise of securities
136
Q

Under Reg M, when does the restricted period for a merger occur?

A

The day the proxy has been sent to shareholders

137
Q

13D Disclosure

A

Must be made promptly - 2 business days

138
Q

What type of trust cannot participate as an owner of an S Corp

A

Charitable remainder trust

139
Q

Enterprise Value Perpetuity Calc

A

= Cash flow / (WACC-growth rate)

Series 79 (1 decks)

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