Series 65 - Unit 8 - Federal Securities Regulation
Series 65 - Unit 8 - Federal Securities Regulation
Exam (elaborations)
Series 65 - Unit 8 - Federal Securities Regulations || Already Passed.
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Series 65 - Unit 8 - Federal Securities Regulation
Institution
Series 65 - Unit 8 - Federal Securities Regulation
Investment contract according to 1933 act correct answers - Investment of money
- Common enterprise
- Expectation of profit
- Results solely from the effort of other
Underwriter correct answers - Buys securities from an issuer with intention of selling it
- Does not include brokerage firm ...
Series 65 - Unit 8 - Federal Securities Regulations || Already
Passed.
Investment contract according to 1933 act correct answers - Investment of money
- Common enterprise
- Expectation of profit
- Results solely from the effort of other
Underwriter correct answers - Buys securities from an issuer with intention of selling it
- Does not include brokerage firm earning commission on retail sale to public
Tombstone advertisement correct answers - Only identifies security, price, and underwriters
- Not considered a prospectus
Prospectus correct answers - Must offer security for sale or confirm the sale of one
Exempted securities under 1933 act (at federal level) correct answers - Any security
issued/guaranteed by government (all levels)
- Commercial paper with maturity <270 days, money must be for working capital
- Security for religion, education, charitable, purposes, etc.
- Railroad equipment trusts
- Federal or state bank securities
Securities exempt at federal but not state level correct answers - Rule 147 issue - issuer sells
entire issue to only people in the same state
- Enable people to raise local money
- Business must operate primarily in the state
- Resales of security only to people within the state for first 9 months after issue
- 80% - gross revenue, proceeds for business peruposes, assets in the state
Registration statement correct answers - Discloses material information about the issue and is
signed by key executives and board of directors
- Include information like - purpose of issue, financials, articles of incorporation, etc.
Cooling off period correct answers - Minimum 20 days following registration statement - begins
before registration becomes effective
- No soliciting sales during this period but can receive indications of interest
- Just waiting for SEC to clear the registration statement
Cooling off period - stop order correct answers - SEC stops all underwriting if they suspect fraud
or conditions not met
Preliminary prospectus correct answers - Available to any potential buyer who expresses interest
from the time the issue is filed with the SEC until the effective date when it can be sold
- Not a sale confirmation, registration statement, or final offering price
, Cooling off period - what is allowed for underwriters correct answers - Take indications of
interest
- Distribute preliminary prospectuses
- Publish tombstone advertisements about potential availability of securities
Cooling off period - what is not allowed for underwriters correct answers - Make offers to sell
securities
- Take orders
- Distribute sales literature or advertising material
Rule 482 (omitting) prospectus - conditions (5) correct answers - Allowed for investment
companies and describes mutual fund advertisements
- Information taken from regular prospectus
- State clearly where the prospectus came from
- Must urge investors to read prospectus
- Statements of past performance must have disclaimers/disclosures
- Advertisement cannot be used to purchase shares - only with application in the prospectus
SEC disclaimer correct answers - Included in every prospectus on the front page
- Securities not approved/disapproved by the securities, SEC not passing on the accuracy
Time limit for suing under 1933 act correct answers - Earlier of one year after discovery of the
violation or three years after the date of action
SEC Rule 506 Regulation D correct answers - Provides an exemption for offers/sales to no more
than 35 purchasers
- Accredited investors do not count toward the limit
- Cannot have any general solicitation or advertisements
- Helps get around need for prospectus
SEC Rule 501 correct answers - Defines accredited investor
-- Bank, insurance, or registered investment company
-- Employee benefit plan - decision made by RIA or plan has $5MM+
-- Charitable organization, corporation, or partnership with $5MM+
-- Directors, executive officers, general partners of the issuer
-- Individual with liquid assets >$1MM or income greater than $200k, does not include primary
residence
Form D correct answers - Filed with the SEC no later than 15 days after the first sale
- Requires basic info about issuer and offer
- Federally covered securities - no state law can restrict or regulate these securities
- States can require notice
JOBS Act - Section 506(c) correct answers - Permits advertising on private placements under
Regulation D
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