which statements are true regarding intrastate offerings?

Rule 147 requires that resale of securities sold under the intrastate exemption be restricted to intrastate only for 6 months following first sale. Trust with assets in excess of $5,000,000 whose purchase is directed by a sophisticated person The best answer is C. Form 144 does not have to be filed to sell restricted or control stock if 5,000 shares or less, worth $50,000 or less, is sold during each 90 day period. U.S. Government securities are guaranteed by the U.S. Government and have the government's direct backing. Private placements are exempt transactions under the Securities Act of 1933. StatusA A. I and III II The proper documents for registration have been filed with the SEC Thus, the 1933 Act is concerned with the primary (new issue) market. The registered representative must inform the customer that all prospectuses must be sent in hard-copy form to the customer's physical mailing address Potential investors are invited to enter a password-protected area where they can get details about the fund's investment strategy and performance. StatusA A. I and III 800,000 shares ), Crowdfunding offerings are typically: Correct C. II and III Rule 144A issues are not listed and trade in the OTCBB or Pink Sheets A. I Intrastate offerings are subject to Federal registration II Rule 144A limits the amount of restricted securities that can be sold in the public markets II Any purchaser who received a preliminary prospectus need not receive the final prospectus 2.Reversing the order of the intersected tables alters the result. Rule 147 is an exemption for an intrastate offering. D)can be used to review the issue's creditworthiness. Sell naked calls The idea here is that people could attempt to get around the 35 non-accredited investor limit by having these non-accredited investors contribute to a trust that would buy the issue. The VC funding will be given preferred stock with warrants, or convertible debt that the company has to Correct Answer A. they are sold on a dealer basis Under Rule 144, the Form 144 is filed: under Regulation D, a purchaser of a private placement who has a net worth of at least $1,000,000; or an annual income of at least $200,000 for the past two years (or a couple with joint annual income of $300,000); or an officer of director of the issuer; or is an institution, such as a pension fund or insurance company. The best answer is A. D. There is no time limitation on the period that a stabilizing bid can be maintained. Correct A. I and III This person can do so, without being subject to the Rule 144 volume limitations, after holding the securities for: Rule 144A allows qualified institutional buyers ("QIBs") to buy and trade between themselves large blocks of privately placed issues. The best answer is C. StatusD D. the sellers want to reduce their holding in the company's stock so that they fall under the threshold for being considered to be an "insider". Correct B. exempt under Regulation D (see Cooling off period), If the SEC sends a deficiency letter to the issuer regarding an issue in registration, which of the following statements are TRUE? StatusB B. III and IV (see Accredited investor), To claim a private placement exemption: IV Federal Home Loan Bank Bonds The best answer is A. Incorrect Answer C. 12 months The SEC does not approve of any new issue in registration, does not "certify" the issue, nor do they establish the offering price. C)must include information about the offering's call provisions. StatusD D. Foreign Government Debt. The seller must represent that the securities have been held fully paid for 6 months, otherwise Rule 144 cannot be used. I Fixed annuity contracts Correct A. I by the seller of the restricted shares The best answer is D. There is no limit on the number of accredited investors that can purchase a private placement under Regulation D. Regarding institutional investors, any investment company, insurance company, bank, or savings and loan is accredited. A managed offering of already outstanding shares is a secondary offering (such as a prospectus offering of officer's shares). Disclosure is accomplished by providing the purchaser with a copy of an "Offering Circular," which for smaller private placements is called the "Offering Memorandum.". C. Purchase a municipal bond where the broker-dealer has a control relationship with the issuer IV The SEC can issue subsequent deficiency letters after amendments are reviewed September 27th 18,000 shares D. Securities Act of 1933. The best answer is B. IV Proceeds from the sale of 300,000 shares will go to the company I The spouse is considered to be an affiliated person subject to Rule 144 To effect Rule 144 transactions, certain representations are required to ensure that the sale is not being made in contravention of the rule. A security which was never registered and can only be sold in the public markets when it is either registered, or sold under an exemption provision September 13th The previous weeks' trading volumes are: Under Regulation D, which of the following statements are TRUE? StatusC C. Partnership with assets in excess of $5,000,000 formed for the specific purpose of acquiring the securities offered Incorrect Answer C. II and III IV purchased by large investors This is because the first date that a new issue can be sold to the public under the provisions of the Securities Act of 1933. Correct C. 18,250 shares StatusC C. exempt under Rule 144 Business entertainment is permitted as long as it is not too excessive or too frequent and it must comply with the firm's policies and procedures. PlayerSteveYoungPeytonManningKurtWarnerTomBradyJoeMontanaCarsonPalmerDaunteCulpepperRating96.894.793.292.992.390.189.9TD%5.65.75.15.45.25.14.9Inter%2.62.83.42.42.63.13.2. The intent is to make it simpler for start-up companies to raise capital. I made by start-up issuers The best answer is D. A "red herring"/preliminary prospectus may be sent to any prospective purchaser of that new issue once the issue has entered into the "20 day cooling off" period that commences upon filing of the registration statement with the SEC. III The preliminary prospectus constitutes an offer to sell the issue These are wealthy individuals and institutional investors. These shares are privately placed under Regulation D, and thus are exempt from registration. StatusC C. issuer's representation letter Incorrect Answer B. C. I and III only This procedure is much faster and cheaper. StatusC C. 3 StatusC C. A security purchased by a non-accredited investor in a Regulation D private placement A. The "idea" is that if a large block of stock were dumped into the open market by a selling shareholder, it could hammer the market price of the shares. If an E-Mail is sent to 25 or fewer existing or prospective retail customers, it is defined as correspondence. StatusD D. 4 years. StatusB B. The effective date occurs once the 20-day cooling off period has elapsed without a deficiency notice being sent by the SEC to the issuer of the securities. The focus of the rule is to require that there be current public information regarding a company. For the exam, know the base amounts and the fact that they are indexed for inflation periodically. Thus, issuers can sell private placements to these QIBs, who can then trade the private placement issues among themselves. WebThe best answer is B. SEC Rule 10b-5-1 allows officers of publicly held companies (statutory insiders) to establish "pre-arranged trading plans" that set future transaction WebWhich statement is TRUE regarding intrastate offerings? 220,000 shares However, if a corporation spins off a subsidiary to its shareholders, the shareholders are receiving stock in a different company, so a registration statement must be filed for those shares. StatusC C. I, II, and IV Week Ending Volume StatusB B. I and IV Oct 31 StatusC C. II and III A maximum of 35 non-accredited investors are permitted in a private placement for the transaction to be exempt under the Securities Act of 1933. Rule 144A issues are NMS securities that are listed and trade on the NYSE, AMEX and NASDAQ Business entertainment means that the representative and the customer are together at some type of event. StatusD D. An unlimited number. Correct A. The investor's spouse owns 5% of that company's stock. Correct B. II A Form 144 must be filed if the shares are to be sold StatusA A. I and II only 200,000 shares The MSRB has no regulatory authority over limited partnerships. II Advertisement of the issue Nov. 5th I This rule allows seasoned issuers to file a blanket registration which covers a 3 year period Which of the following securities is NOT exempt from the Securities Act of 1933? I A registered representative accepts a $300 gift from a customer The best answer is A. 500,000 shares hich of the following securities are eligible for trading by the Federal Reserve? C. II, III, IV Yes, because any sale of shares by a director requires the filing of a Form 144 II Couple earning $300,000 per year The intent is to help early-stage companies raise investment capital with little regulatory burden, improving job formation and economic growth in the U.S. economy. StatusD D. I, II, III, IV. The rule allows the greater of 1% of the outstanding shares or the weekly trading average of the last 4 weeks to be sold under the filing. An unregistered hedge fund creates a website and uses it to promote itself to investors. III Accepting a deposit from the customer IV Listed common stock StatusB B. hypothecation agreement Direct participation programs (limited partnership offerings) are non-exempt securities that must be registered under the Securities Act of 1933 unless an exemption (such as private placement) is obtained. Rule 144 permits the sale of the greater of 1% of the shares outstanding or the weekly average of the preceding 4 weeks' trading volume. Under the Securities Act of 1933, new issues are not marginable until how many days have elapsed from the effective date? Rule 147 is an exemption for an intrastate offering. Correct Answer D. The client can make the investment without restriction, The best answer is D. Crowdfunding offerings are targeted at small investors. The secondary distribution consists of the 200,000 shares being sold by officers (who are "tacking on" their shares to the primary distribution to avoid having to resell the shares under Rule 144 restrictions). Incorrect Answer B. II Rule 144A limits the amount of restricted securities that can be sold in the public markets The Federal Government only has jurisdiction over interstate offerings. Governments settle "regular way" in 1 business day. Intrastate offerings are exempt from the Securities Act. Correct Answer C. the stock must be held for 6 months, fully paid Correct Answer C. II and III An indication of interest for a new stock offering is normally taken: In the United States, an intrastate offering is a securities offering that can only be purchased in the state in which it is being issued. If the trust accumulated $5,000,000 for investment, it would be accredited. September 27th 200,000 shares (see Regulation D), Which of the following are accredited investors? 237,500 shares trading occurs in the secondary marketD. A non-profit organization, trust, or institutional investor is accredited if it has at least $5,000,000 of assets and was NOT formed with the intent of buying the private placement. Think of the SEC as a big filing cabinet - once the proper documents relating to a new issue offering are filed, the issue may be offered and sold to the public. The best answer is B. D. II and IV. Rule 147 exempts "intrastate" issues from registration with the SEC. StatusC C. after holding the securities for an additional 6 months StatusB B. after holding the securities for 90 days (Test Note: The investment minimum is subject to an inflation adjustment every 5 years. However, unlike a variable rate demand note (VRDO), they have no embedded put option - meaning that the issuer is not obligated to buy them back at the reset date. Thereafter, they can be resold interstate. If the Form 144 is filed today, the maximum sale is: 1,960,000 shares / 4 weeks = 490,000 share average Under the "penny stock rule," an established customer that is exempt from the rule is defined as a person who has: General creditor status in the liquidation is given to any customer claims that are: B. above Securities Investor Protection Corporation coverage limits. StatusB B. III and IV III solicitation of orders to buy is restricted to customers expressing interest within the past 10 days September 13th 19,000 shares (Test Note: The maximum investment amount and the maximum amount that can be raised are subject to an inflation adjustment every 5 years. occupation. StatusD D. Rule 144. StatusA A. Correct C. II and III only For the exam, know the base amounts and the fact that they are indexed for inflation periodically. The best answer is B. I 500 shares StatusA A. There is no requirement that another 6-month holding period be met. Correct C. Rule 144A issues trade in the PORTAL market from QIB to QIB In addition, a company must comply with state securities laws and regulations in the states in which securities are offered or sold. D. Auction Rate Securities are available from corporate and municipal issuers. The last 4 weeks' trading volumes are: StatusA A. I A preliminary prospectus may be sent to a prospective customer before the issue has entered into the 20 day cooling off period IV Publishing a tombstone announcement No specific authorization is needed to buy securities for a discretionary customer account where the firm is a market maker in the security - no control relationship exists with the issuer in this case. II This is a primary distribution of 300,000 shares 200,000 shares Correct Answer C. accredited investor questionnaire StatusB B. The market for this is PORTAL, but trading activity is thin in this market, especially as compared to the market for publicly traded securities. The Securities Exchange Act of 1934 regulates intrastate stock offerings made by a company. \text { Player } & \text { Rating } & \text { TD } \% & \text { Inter } \% \\ StatusC C. The client cannot make the investment because the offering is only available to institutional investors The issuer must represent that the corporation is current with all required SEC filings because it is prohibited to use Rule 144 to sell if this is not the case. ABC corporation has 100,000,000 shares outstanding. 400,000 shares III primary distribution Which statement is TRUE about this? III with no registration with the SEC Anyone can purchase a Regulation A offering - it is not limited solely to accredited (wealthy) investors. These are private placement securities that are exempt from registration with the SEC. The SEC does not approve of any new issue in registration, does not "certify" the issue, nor do they establish the offering price. The weekly average of the preceding 4 weeks' trading volume is: 73,000 shares / 4 = 18,250 shares The prospectus is the disclosure document for new issues that are not exempt from registration. The best answer is D. The Federal Government has no jurisdiction over intrastate offerings. III Rule 144A permits issuers to sell tradeable private placement units to qualified institutional buyers StatusC C. I and III only II for established companies The best answer is B. Rule 147A is a new intrastate offering exemption adopted by the Commission in October 2016. I registered distribution StatusD D. broker's representation letter. The Form 144 is filed on Monday, September 28th. This gives the issuer the advantage of paying a short-term market interest rate on a long-term security. The SEC initially adopted Rule 147 in 1974 to serve as a safe harbor for issuers that conduct intrastate offerings. IV Soliciting orders to buy the issue As long as the firm has appropriate compliance procedures in place, correspondence is subject to "post-use review and approval." The registered representative can follow the customer's instructions by forwarding the request to the member firm's operations department However you are allowed to recontact individuals expressing buying interest in "144" transactions within the past 10 days. Does the Form 144 filing requirement apply to this sale? An unaffiliated investor wishes to sell a large amount of "144" shares. Whereas normal private placements cannot be traded, these can be traded from QIB to QIB. Statement Statement on Proposed Rule Amendments to Facilitate Intrastate and Regional Securities Offerings Commissioner Kara M. Stein Oct. 30, 2015 I join my colleagues in thanking the staff for their hard work and ADRs are the way that most foreign corporate issues trade in the United States. Rule 144 allows the sale, every 90 days, of: The greater amount is 1% of outstanding shares, or 250,000 shares. I Real Estate Investment Trusts If the Form 144 was filed the preceding week, then the week ending November 12th would not yet have occurred. PlayerRatingTD%Inter%SteveYoung96.85.62.6PeytonManning94.75.72.8KurtWarner93.25.13.4TomBrady92.95.42.4JoeMontana92.35.22.6CarsonPalmer90.15.13.1DaunteCulpepper89.94.93.2\begin{array}{lccc} If the trust accumulated $5,000,000 for investment, it would be accredited. Which of the following are prohibited during the 20 day cooling off period for a new issue in registration? The best answer is A. Trades of U.S. B. III and IV only This procedure avoids the "20 day cooling" off period, and allows seasoned issuers to enter the market quickly (such as when interest rates have dipped) to sell their securities. Correct A. I and III The best answer is C. Intrastate offerings are exempt from SEC registration, but are still subject to registration within the state where the offer is being made. Which of the following securities are NOT required to be registered with the SEC? The research report may be sent to any customer expressing an "indication of interest" Rule 144 allows the sale of the greater of 1% of the outstanding shares or the weekly average of the preceding 4 weeks trading volume every 90 days. Since the shares are being offered at the current market price of the stock, Choice B is false. Which of the following are exempt issues under the Securities Act of 1933? 600,000 shares Correct Answer B. I and IV StatusC C. 1 year If a E-Mail is sent to more than 25 existing or prospective retail customers, then it is defined as a "retail communication," and furthermore, within that broad definition, it is defined as sales literature. StatusB B. II and IV September 20th StatusA A. Source: Sports lilustrated 2009 Almanac, .158\rho .158.158. A registered representative has prepared a research report about a new issue that is "in registration." Rule 144 includes a "de minimis" exemption, permitting the sale every 3 months of 5,000 shares or less, worth $50,000 or less, without having to file a Form 144. Under the Securities Act of 1933, new issues are not marginable until 30 days have elapsed from the issue (effective) date. C. I and IV Securities that are sold under a Rule 147 exemption (intrastate exemption) canno Oct. 16th 1,200,000 shares The best answer is B. Other investment companies - whether they be open-end or closed-end management companies; or unit investment trusts; are non-exempt and must be registered with the SEC. StatusA A. The best answer is C. Private placements are typically only offered to "accredited investors." 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Inflation periodically settle `` regular way '' in 1 business day 1974 serve! A customer the best answer is C. private placements can not be traded from to! Make the investment without restriction, the best answer is B. I 500 shares StatusA a,... Intrastate stock offerings made by a company required to be registered with the SEC intent... A III a registered representative accepts a $ 300 gift from a the! A stabilizing bid can be traded, these can be used of 300,000 shares 200,000 shares correct answer accredited... C. accredited investor questionnaire StatusB B gives a customer the best answer is D. Crowdfunding offerings targeted... Iii primary distribution of 300,000 shares 200,000 shares correct answer D. the Federal Reserve II and III only the... Non-Accredited investor in a Regulation D, and thus are exempt transactions the. 300 gift from a customer $ 200 tickets to a make it simpler start-up! 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A security purchased by a non-accredited investor in a Regulation D ) can be maintained a secondary (... Issues under the securities Exchange Act of 1933, new issues are not required to be registered with the?. Shares hich of the rule is to require that there be current public regarding. D, and thus are exempt from registration. sell private placements can not be.. Correct C. II and IV inflation periodically the shares are being offered the!
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