Unit 8: Regulation of Securities and Their Issuers

Question 1

Uniform Securities Act 1956

Answer 1

Template for states to adopt for their own legislation

Question 2

Administrator

Answer 2

Has responsibility to administer securities law of the state

Question 3

Security

Answer 3

An (1) investment of money in a (2) common enterprise (4) with the expectation of profit (4) by the efforts of a person other than the investor.

Question 4

Examples of non-securities

Answer 4

Fixed Annuity
Retirement Plan (over $1M assets)
Collectibles
Commodities, Futures, Forwards
Condo/personal residence
Currency

Question 5

Issuer

Answer 5

one who issues or proposes to issue a security

Question 6

Securities without an issuer

Answer 6

Certificates of interest, oil/mining participation, pre-org certification, etc.

Question 7

Issuer transaction

Answer 7

if funds go directly to issuer
-therefore, secondary market transactions are non-issuer

Question 8

Exempt security

Answer 8

will be exempt for every transaction

Question 9

Exempt transaction

Answer 9

must be established in each instance

Question 10

Examples of Exempt Securities

Answer 10

Govt Securities
Insurance Co
Public Utility
Non-profit
EBP
Money markets
DO of Depository Institution

Question 11

Federal Covered Securities

Answer 11

Exempt at State level, but will “notice file”
-1940 Act Securities
-Listed securities
-Private Placement
Muni Bonds (unless that state)

Question 12

Rule 147

Answer 12

The entire offering is in that state

Question 13

Rule 147A

Answer 13

Issuer can be outside state, but offering in one state. OK if general advertising

Question 14

Exempt Transaction under USA

Answer 14

-Isolated non-issuer transaction “For Sale By Owner”
-Unsolicited
-Between Issuer/Underwriter
-Trustee in bankruptcy
-Institutional Transactions
-Limited Offering (10 or less non-institutional persons, no soliciting, no commissions)
-Non-issuer transaction by pledgee

Question 15

Proving issue is exempt

Answer 15

is responsibility of the person requesting it. Agent/Rep must still be properly registered

Question 16

Exempt Transaction under Securities Act 1933

Answer 16

Performed by anyone other than issuer
Performed by issuer, but not a public offering

Question 17

Issue cooling off period

Answer 17

Cannot solicit sales, but can gather interest

Question 18

Preliminary Prospectus

Answer 18

missing POP (but can have range) and effective date

Question 19

Registering with state (USA 1856)

Answer 19

-amount of securities to be issued
-in which states
-any adverse adjustments
-anticipated use of funds and effective date
application can also be submitted by a large shareholder

Question 20

Three methods for registering

Answer 20

Notice filing- for ones already federally covered (trades on national exchange)
Coordination- if already filed under 1933 Act- mutual funds
Qualification- intrastate securities

Question 21

Overselling an offer

Answer 21

is allowed if:
-POP is kept the same
-underwriter discounts/commissions are kept the same

Question 22

SPAC acquisition

Answer 22

makes private company become public