Progress Exam 1B - Series 24
The BOD of a listed issuer is considering taking the company private. Which of the following is TRUE?
A. This activity requires the approval from FINRA and the filing of a Reg. D disclosure form.
B. The issuer must reduce the number of voting shareholders below 100 before it can go private.
C. Schedule 13 E-3 must be filed with the SEC.
D. All current shareholders must be given the opportunity to own the private stock. - correct answer
✔✔C. Schedule 13 E-3 must be filed with the SEC.
SEC Rule 13e-3 applies to going private transactions by certain issuers or affiliates. It involves
transactions where an issuer (or an affiliate of the issuer) is purchasing its own common stock and this
will likely cause the company to become delisted from an exchange, or to be no longer considered a
reporting issuer. Some companies want to delist in order to reduce the costs and administrative burden
of being a publicly traded company.
Instead of selling the company to a private equity firm, a going private transaction permits the
management to maintain control of the company. The company could repurchase its shares through a
tender offer; however, there is no assurance that an adequate number of shareholders will tender shares
and reduce the number of shareholders below the SEC reporting threshold of 300. Since the issuer will
be delisting its shares from the NYSE, it is required to file Schedule 13e-3 with the SEC. The issuer is also
required to file a 14A proxy statement with the SEC, since shareholders will need to receive information
on the transaction.
Regulation FD applies to:
A. Issuers.
, B. Broker dealers.
C. Form 4 filers.
D. Research personnel only. - correct answer ✔✔A. Issuers.
Regulation FD applies to issuers of securities. Regulation FD requires that material, non-public
information disclosed to analysts or other investors must be made public. If the disclosure is intentional,
the information must be simultaneously disclosed to the public. If the disclosure is unintentional, the
public disclosure must be made within 24 hours. A Form 8-K, filed with the SEC, is one method of
meeting the public disclosure requirement.
Broker-Dealer X is participating in the distribution of an equity IPO. Broker-Dealer X is prohibited from
selling any shares to which of the following accounts?
A. Uniform Transfers to Minors Accounts.
B. Retirement plans.
C. An account purchasing on margin.
D. WRAP customers. - correct answer ✔✔C. An account purchasing on margin.
Distribution participants may not sell issues on margin. The securities (if considered marginable by the
Fed) would be eligible to be used as collateral in a margin account only after being held for 30 days.
Under industry rules, registered representatives employed at a limited broker-dealer are not restricted
from purchasing new issues.
A corporation is about to issue an IPO on the OTCBB. A broker-dealer selling the securities in the
aftermarket is required to deliver a prospectus to purchasers within how many days following the
effective date of registration?
The BOD of a listed issuer is considering taking the company private. Which of the following is TRUE?
A. This activity requires the approval from FINRA and the filing of a Reg. D disclosure form.
B. The issuer must reduce the number of voting shareholders below 100 before it can go private.
C. Schedule 13 E-3 must be filed with the SEC.
D. All current shareholders must be given the opportunity to own the private stock. - correct answer
✔✔C. Schedule 13 E-3 must be filed with the SEC.
SEC Rule 13e-3 applies to going private transactions by certain issuers or affiliates. It involves
transactions where an issuer (or an affiliate of the issuer) is purchasing its own common stock and this
will likely cause the company to become delisted from an exchange, or to be no longer considered a
reporting issuer. Some companies want to delist in order to reduce the costs and administrative burden
of being a publicly traded company.
Instead of selling the company to a private equity firm, a going private transaction permits the
management to maintain control of the company. The company could repurchase its shares through a
tender offer; however, there is no assurance that an adequate number of shareholders will tender shares
and reduce the number of shareholders below the SEC reporting threshold of 300. Since the issuer will
be delisting its shares from the NYSE, it is required to file Schedule 13e-3 with the SEC. The issuer is also
required to file a 14A proxy statement with the SEC, since shareholders will need to receive information
on the transaction.
Regulation FD applies to:
A. Issuers.
, B. Broker dealers.
C. Form 4 filers.
D. Research personnel only. - correct answer ✔✔A. Issuers.
Regulation FD applies to issuers of securities. Regulation FD requires that material, non-public
information disclosed to analysts or other investors must be made public. If the disclosure is intentional,
the information must be simultaneously disclosed to the public. If the disclosure is unintentional, the
public disclosure must be made within 24 hours. A Form 8-K, filed with the SEC, is one method of
meeting the public disclosure requirement.
Broker-Dealer X is participating in the distribution of an equity IPO. Broker-Dealer X is prohibited from
selling any shares to which of the following accounts?
A. Uniform Transfers to Minors Accounts.
B. Retirement plans.
C. An account purchasing on margin.
D. WRAP customers. - correct answer ✔✔C. An account purchasing on margin.
Distribution participants may not sell issues on margin. The securities (if considered marginable by the
Fed) would be eligible to be used as collateral in a margin account only after being held for 30 days.
Under industry rules, registered representatives employed at a limited broker-dealer are not restricted
from purchasing new issues.
A corporation is about to issue an IPO on the OTCBB. A broker-dealer selling the securities in the
aftermarket is required to deliver a prospectus to purchasers within how many days following the
effective date of registration?
