Unit 2 Flashcards
Under the Uniform Securities Act, which of the following regarding the registration of securities is TRUE?
Registration by qualification becomes effective on a date ordered by the Administrator.
Registration by qualification becomes effective when the Administrator so orders. In the case of registration by qualification, the Administrator can require that the prospectus be delivered prior to or concurrent with the sale. In other cases, the prospectus must be delivered no later than with confirmation of the trade or when the security is delivered and there is nothing to prohibit it from being delivered sooner. The act prohibits any statement or implication that registration involves approval or verification of facts by the Administrator. There is no such term as “registration by exemption” and this choice is referring to coordination by an incorrect name.
When registering a security under the Uniform Securities Act, the registrant must indicate all of the following EXCEPT
the effective date of the offering
The effective date is determined by the state Administrator or the SEC, not the person registering the security. Registrants must indicate all other states in which the security is to be registered. The amount of securities to be offered in the state, for which a specific registration is sought, must be disclosed in addition to any adverse rulings related to the offering.
Under the Uniform Securities Act, which of the following statements regarding the limited offering exemption is TRUE?
The security that is the subject of the private placement need not be registered.
Private placements are offers to no more than 10 noninstitutional persons in a 12-month period for investment purposes (not immediate resale), where no commissions are paid, directly or indirectly. Such transactions are exempt from registration requirements.
However, payment is made when the purchase is made—these may be exempt from registration, but they are not free of cost. There is no prospectus because a prospectus is the document provided by registered issues.
Please note that when it comes to institutional clients, there are no numerical limitations on offers, no required holding period, and no restrictions on payment of commissions.
The Uniform Securities Act provides an exemption from registration for certain securities and for certain transactions. However, the Administrator is not empowered to deny an exemption from state registration to
I. U.S. government securities
II. private placement transactions
III. a transaction with an insurance company
IV. municipal bonds issued by another state
I and IV
Other than in a transaction involving a federal covered security, the Uniform Securities Act gives the power to the Administrator to deny an exemption to any exempt transaction such as private placements or transactions with professional investors such as insurance companies or bank trust departments. However, when it comes to a security’s exemption, the Administrator may only deny exempt security status to an issue of a nonprofit organization or an investment contract issued in connection with an employee benefit plan, never a U.S. government security or one issued by another state.
Which of the following terms pertains to registration with the Administrator of a mutual fund, closed-end investment company, or unit investment trust that is registered under the Securities Act of 1933 and also registered as an investment company under the Investment Company Act of 1940?
Notice filing
Federal covered securities (securities listed on national stock exchanges, Nasdaq Stock Market or investment companies registered under the Investment Company Act) are exempt from state registration. A notice filing may be required along with a payment of fees based on a schedule set forth by the Administrator.
The term “security” includes all of the following EXCEPT a
Keogh plan invested exclusively in mutual funds
A Keogh plan, or any other retirement plan, is not defined as a security under the USA. A right or warrant, voting trust certificates, and debentures are defined as securities.
All of the following are exempt from the registration requirements of the USA EXCEPT
stock issued by a Canadian company that provides actuarial services to insurance companies
Securities issued by Canadian governmental entities, such as the federal government or the provincial governments and their municipalities, are exempt from registration under the USA in the same fashion as US government and municipal securities. However, Canadian corporate issuers do not enjoy an exemption from registration unless qualifying under special conditions, such as being listed on the NYSE or Nasdaq, making it a federal covered security. Investment companies registered under the Investment Company Act of 1940, regardless of where they trade, are exempt from registration because they are federal covered securities.
ABC Corporation, a newly formed company, has filed a registration statement with the SEC under the Securities Act of 1933. If they wish to use coordination to register in this state, which of the following statements is TRUE?
A statement of the maximum and minimum proposed offering prices and maximum underwriting discounts and commissions must be on file with the Administrator for two full business days prior to the date the federal registration statement becomes effective.
One of the requirements of coordination is that a statement of the maximum and minimum expected offering prices and maximum underwriting compensation must be on file with the Administrator for at least two full business days prior to the effective date. The whole purpose of coordination is to coordinate federal and state registration so choosing “the federal registration makes state registration unnecessary” makes no sense. If it had said this was a federal covered security, there would be no discussion of coordination because covered securities are exempt from state registration.
With regard to the registration requirements of the Uniform Securities Act, which of the following statements are TRUE?
I. Only the issuer itself can file a registration statement with the Administrator.
II. An application for registration must indicate the amount of securities to be issued in the state.
III. The Administrator may require registrants to file quarterly reports.
II and III
The USA requires that any application for registration include the amount of securities to be sold in that state. The Administrator has the power to request regular filings of reports, but no more frequently than quarterly. While the issuer is most commonly the registrant, application may also be made by selling stockholders and broker-dealers.
All of the following are nonissuer transactions EXCEPT
Intel sold 10 million shares of its preferred stock in a private placement transaction to a syndicate of five pension funds
When an issuer sells its own securities, it is an issuer transaction. When someone other than the issuer sells securities, it is a nonissuer transaction.
