Unknowns 2 Flashcards
Days and Facts
Based on written request, what is the maximum period that a B/D may hold customer correspondence?
Three months. To exceed three months, the customer must provide the B/D with a valid reason for the request.
The Hearing Panel must give a member firm ____ days prior notice before a hearing is held.
28 days prior notice before a hearing is held
Three months ago, an insider acquired stock at $12. If she sells the shares today at $15, may she keep the profit?
No. Under the short-swing profit rule, an insider may not keep a profit earned on stock held less than six months.
Insiders must return short-swing profits, which are profits earned on stock that has been held for less than ___ months.
Insiders must return short-swing profits, which are profits earned on stock that has been held for less than six months.
If firm is acting as a dealer (not a manager or co-manager) on an IPO, what’s the quiet period on research?
Dealers cannot publish research until 10 calendar days after an IPO.
What is the penalty if a CQS market maker (third market) has an unexcused withdrawal from publishing a quote?
One business day in that stock
An underwriting manager must wait _____ calendar days before publishing research on the issuer’s secondary offering.
An underwriting manager must wait three calendar days before publishing research on the issuer’s secondary offering.
How many days must a distribution ppt provide purchasers with a prospectus for a non-listed IPO?
90 Days
How many days must a distribution ppt provide purchasers with a prospectus for a non-listed follow-on offering?
40 Days
How many days must a distribution ppt provide purchasers with a prospectus for a listed IPO?
25 Days
How many days must a distribution ppt provide purchasers with a prospectus for a listed follow-on offering?
0 days - no restriction
Allows for multi-state offers, but sales can only be in-state residents
Rule 147A
How long are resales prohibited to non-residents under Rule 147?
6 months
What does Reg A permit?
Discussing the security before filing
Max offering size for Tier 1? Tier 2?
Max amt sold by existing shareholders? Tier 1/Tier 2
Tier 1 is $20mm
Tier 2 is $75mm
30% of offering:
Tier 1 is $6mm
Tier 2 is $22.5mm
Reg A limits what?
How much capital can be raised over 12 months by US or Canadian issuers. Must provide Offering Circulars
Reg D allows how many non-accredited investors? and how many accredited?
35 non-accredited (require purchaser reps) and unlimited accredited
How long is the holding period for restricted stock under Rule 144?
6 mos (can be sold before 6 mos by filing the stock)
Under Rule 144, when is notifying the SEC by filing Form 144 to sell orders NOT required?
If selling no more than 5,000 shares AND $50k of securities
Who can be sold restricted securities under Rule 144A?
QIBs
What is the holding period for a Reg S security that is resold to a designated offshore/foreign market?
There isn’t one - resold IMMEDIATELY
When can a Reg S non-convertible debt be resold?
After 40 days
When can a Reg S equity of a reporting company/issuer be resold?
After six months
When can a Reg S equity of a non-reporting company/issuer be resold?
After one year
True or False: Control stock must be held for six months before it may be sold under Rule 144.
False: Control stock has no holding requirement. Restricted stock must be held for six months.
What fees are NOT compensation to an UW?
-Registration fees (including Blue-Sky fees)
-Accounting fees
-FINRA filing fees
-Prospectus printing costs
When does the trading restricted period begin when the ADTV is at least $100k AND at least a $25mm mkt value public float?
Begins ONE business day prior to pricing
When does the trading restricted period begin when the mkt value/public float aren’t mentioned?
Begins FIVE business days prior to pricing
During the restricted period, passive mkt making is permitted if there is at least one ______?
Independent market maker; PMM my not bid higher than the highest Independent bid
Distribution ppts and illiquid stock (ADTV less than $100k)
How long is the Reg M Restricted Period?
5 business days prior to pricing (passive)
Distribution ppts and moderately liquid stock (ADTV of $100k)
How long is the Reg M Restricted Period?
One business day prior to pricing (passive)
Distribution ppts and actively traded stock (ADTV of $1mm)
How long is the Reg M Restricted Period?
No restriction
Issuers and selling shareholders and illiquid stock (ADTV less than $100k)
How long is the Reg M Restricted Period?
Five business days prior to pricing (no activity)
Issuers and selling shareholders and moderately liquid stock (ADTV of $100k)
How long is the Reg M Restricted Period?
One business day prior to pricing (no activity)
Issuers and selling shareholders actively traded stock (ADTV of $1mm)
How long is the Reg M Restricted Period?
One business day prior to pricing (no activity)
When must the final settlement of a syndicate occur?
Within 90 days of closing
What happens if a short sale is effected within 5 business days prior to pricing a new issue?
New issue shares may not be purchased by the short seller to cover the short position
Bona fide purchase of a short sale (no idea of the offering or changed mind) in a connection with an offering allows a person to what?
Close out the short sale at least one business day prior to pricing and still purchased the offered security
BD to BD Buy-In
for Fail to Deliver
Buy-in is a Non-Delivery
Give notice 2 bdays before buy-in
S+3 bdays or T+4 bdays
BD to Customer Buy-In
for Fail to Deliver
Buy-in is a Non-Delivery
Customer doesn’t deliver to B/D
S+10 bdays or T+11
BD to BD Sell-Out
for Fail to Deliver
Dealer didn’t Pay
On the settlement date or T+1
Immediate sell-out
BD to Customer Sell-Out for
Fail to Deliver
Customer didn’t Pay
S+3 or T+4
Could freeze acct for 90 days
How long of a wait could there be for securities in transit by the transfer agent for a buy-in?
Seven days
When in a straddle state, only the side within the price band is _____.
Executable
During a 5 min trading pause b/c of a limit state what is still Ok?
Quotes ONLY
NO EXECUTIONS
NBB is below the lower band and NBO is above the upper band is what?
Straddle state
When is a straddle state happening?
NBB is BELOW the lower band
OR
NBO is ABOVE the upper band
When is a limit state happening?
NBB is equal to or above upper band
OR
NBO is equal to or below lower band
When in a straddle state, only ____ within the price band is executable.
When in a straddle state, only the side within the price band is executable.
What Retail Communications need FINRA approval 10 days PRIOR to first use?
-1st Year/New Firm
-Invest Co (MFs) ads with rankings
-Options/Futures ads
-UNDER ORDER
Reg NMS/Rule 605
How often are exchanges reporting to SEC on market center efficiencies?
Monthly
Reg NMS/Rule 606
How often are order routing of non-directed trades reported?
Monthly
How long is a new issue in the cooling off period and not able to be solicited?
20 days
What is a WKSI?
Well-know Seasoned Issuer
-has at least $700mm public float
OR
-has at least $1b in non-covertable bonds
-Been a reporting company for 12 mo
-Not failed to pay a dividend or bond payment
-Can use shelf registration and form S-3 for IPO
When must a receiver respond to a complaint from FINRA’s Department of Enforcement?
A response must be filed within 25 days. If this response is not filed, a second notice will be sent, to which the respondent now has 14 days to answer. Failure to respond to the second notice may be treated as the respondent’s admission to the allegations in the complaint.
Broker-dealers are required to report third-market transactions to the TRF within ____ after executing a trade. The other side of the transaction must report the transaction for clearing purposes within ______.
Report transactions within 10 seconds
Report the clearing transaction within 20 minutse
Suspicious Activity Report (SAR) should be filed:
for most suspicious transactions, depending on the facts and circumstances surrounding the transaction
-Transaction or group of transactions equals $5000
-File within 30 calendar days
-Reported to Principal
-Bank Secrecy Act/FinCEN/US Treasury
-20 yrs prison AND greater of $500k per trans or 2 amt funds involved
Bank Sececry Act Currency Transaction Report (B(s a)CTR or CTR)
-Filed for CASH withdrawals OR deposits in a signal day of $10k
-File within 15 calendar days
-Bank Secrecy Act/FinCEN/US Treasury
-20 yrs prison AND greater of $500k per trans or 2 amt funds involved
What is an insider?
Officer, Director of the issuer
or greater than 10% owner of the equity
