Note 3 - Series 75 PDF

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Series 75...

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Cash on hand is available

Chapter 8: Prior to the delivery of the fairness opinion to the client company's board of directors, the sell-side advisory team must receive approval from its - internal fairness opinion committee. While the actual constituents of the committees and procedures differ from bank to bank, this is a highly serious, thoughtful, and comprehensive process. In a public deal, the fairness opinion and supporting analysis is publicly disclosed and described in detail in the relevant SEC filings

Chapter 9: A broker-dealer distributes issuer-specific research for a company that meets the requirements for using Form S-3 and which has filed all periodic reports required for the last 12 months. Under Rule 139, this research will not be considered an offer if the dealer distributes research in the regular course of business and - The Rule 139 exclusion is available only for research coverage that is ongoing and does not represent a broker dealer's initial coverage on the issuer or its securities.

Chapter 9: Gun-jumping - Violation that occurs when a new issue is discussed before the REGISTRATION STATEMENT has been filed. Once the registration statement has been filed, the CEO could discuss the new issue, but is limited to discussing only information in the registration statement

Chapter 9: The "burden of proof" standard must be met by - the prudent man standard

Chapter 11: In a best efforts offering, - The arranger agrees to provide less than the aggregate amount of the offering, but agrees to use reasonable commercial efforts to fulfill the capital raise

Chapter 11: Underwriting syndicate group - Is a temporary group that is formed to distribute an offering

The underwriting agreement does not specify the terms by which all members of the synficate must abide

Chapter 12 : A report of total organization and offering expenses (O&O) in a Direct Participation Program lists "miscellaneous" expenses of $150,000 as a bona fide issuer expense. This category of expenses - FINRA requires that all bona fide issuer expenses fall into clearly defined

categories, and "miscellaneous" unclassified expenses are not allowed as such. They will be considered an underwriting expense.

Chapter 12: A broker offers to sell an investor shares in an oil and gas drilling program "at the market." The shares are sold by prospectus and all fees, commissions and costs are disclosed. The prospectus states that shares are only available from the offering syndicate, and they may only be redeemed by direct tender to the program sponsor. Which of the following is TRUE regarding this activity? - This is a violation because no public market for the shares actually exists

"At the market" means that a clear public market exists, and that market is not controlled by the broker dealer making the offer, or a syndicate in which they participate. Under SEC Rule 15c1-8, such an offer is considered manipulative, deceptive or fraudulent if another market does not exist.

Chapter 12: An analyst offers opinions on equity securities in a Webcast presented to more than 15 people. This event will not be considered "communications with the public" if which of the following conditions are met? - To avoid being considered communications with the public under NYSE Rule 472, a Webcast (presented to more than 15 people) should be password-protected, and all participants should receive prior to the event current research supporting the analyst's opinions. Any inaccuracies or outdated information in the documents should be corrected by the analyst during the Webcast.

Chapter 12: Debt obligations at OpCo, where the company's assets are located, are senior to debt obligations at the HoldCo. This is known as which of the following? - Structural subordination refers to the priority status of debt instruments at different legal entities within a company. For example, debt obligations at OpCo, where the company's assets are located, are structurally senior to debt obligations at HoldCo so long as such HoldCo obligations do not benefit from a guarantee (credit support) from OpCo. In the event of bankruptcy at OpCo, its obligations must be satisfied in full before a distribution or dividend can be made to its sole shareholder, HoldCo.

Chapter 12: Penalty bid - A penalty bid is a stabilization bid that is launched by the syndicate manager or another underwriter. If a stabilization is identified as a penalty bid, a syndicate member loses their compensation for shares that are flipped back to the stabilization agent. This encourages underwriters to offer shares to investors who are likely to hold them rather than immediately trade them

Chapter 12: Regualtion M Rule 104

Can underwriters enter a stabilization bid without notifying the SEC?

Selling short days - No

Requires underwriters to notify the SEC prior to entering a stabilization bid. The notification requirement does not apply to syndicate covering transactions, however. Investors are prohibited from investing in a follow-on offering if the stock was sold short within five days prior to pricing.

Chapter 12: The private placement rule states that the person to whom the offer of securities is made must be an informed person - Any potential investor must have access to, or must be furnished with, the information about the issuer that would normally be available in a registration statement

Chapter 14: Regulation D - A company seeking to avoid registration in the US and targeting accredited investors would issue securities via a Regulation D private placement. Regulation D private placements can be sold to an unlimited number of accredited investors and ,for deals in excess of $1 mm, up to 35 non-accredited investors. This type of offering would allow the issuer to avoid filing an SEC registration statement

Chapter 14: Rule 144 and Rule 144A - Rule 144 permits the sale of unregistered stock of an existing public company after a six-month holding period. In this case, the shares have only been held for four months, making them ineligible for sale under Rule 144. Rule 144A allows the sale of unregistered securities to Qualified Institutional Buyers (QIBs) with no holding period. A QIB is generally defined as an institutional investor with $100mm in assets

Chapter 14: SEC Rule 144 provides an exemption for - restricted stock. Restricted stock is stock that has not been registered. It may have been issued through a private placement or an employee stock-ownership plan

Chapter 14: Section 4(a)(5) of the Securities Act of 1933 refers to: - Sections 4(a)(2) and 4(a)(5) of the securities Act of 1933 permit private placements to accredited investors while avoiding the filing of a registration statement.

Chapter 14: Stabilizing activities - must give priority to an independent bid at the same price, regardless of size. They may not maintain more than one stabilizing bid in any one market at the same price at the same time. Prior regulatory notice of the intent to stabilize is required. The activities must be designed to prevent a decline in share price, not to manipulate the price higher. See Chapter 12

Chapter 14: The exemptions provided by Rule 147, Regulation A and Regulation D accomplish which of the following? - Enable issuers to sell securities to the public at less of an expense, if certain conditions are met.

As a general statement, Rule 147, Reg A and Reg D allow the sale of securities to the public without registration with the SEC.

Chapter 14: The safe harbor exemption under Regulation S are subject to which of the following general conditions

-The seller reasonably believes that the buyer is offshore at the time of the offer or sale

-The seller must have verification that the funds to purchase the offering are in US dollars

-No directed selling efforts are be made in the US by the issuer, IB, adviser, or affiliate

-The offshore buyer is a QIB - -I and III

Under Reg S, if the seller does not reasonably believe the buyer is offshore at the time of the sale, the transaction can still take place if it occurs on a designated offshore securities market. Other than that exception the seller must be a non-US resident

Chapter 15: Schedule TO must be filed by an entity that expects to own more than what percentage of the target company's securities? - Schedule TO is required under the '34 Act, and must be filed by entities that expect to own more than 5% of a class of the target company's securities, after the tender is completed.

Chapter 18: A brokerage firm that has been registered with the SEC - Is subject to the SEC's regulation and oversight

Cam sell both exempt and non-exempt securities

Doesn't have to be approved by the SEC as part of its registration process

Chapter 18: FINRA Broker Check - includes bankruptcy information for the past 10 years and other licensing and registration information submitted to FINRA (Form BD and BDW forms for firms; Forms U4 and U5 for representatives). It does not provide details of financial information from quarterly FINRA filings or personal descriptions of representatives. Broker check displays the information for any rep who is either currently active or was active in the past ten years, not the last two years.

Chapter 18: If a registered representative is arrested for theft, but claims innocence, and hasn't been guilty through court yet - Incident would be reported to compliance and the firm can choose to delay the action until the legal process has run its course

Chapter 18: Who is not subject to broker dealer's firm element program? - A mutual fund call center representative who provides INTERNAL support only

Anyone who deals with the public is required to partake in it

Chapter 19: A registered representative occasionally meets clients by appointment at an accountant's office. This office is not advertised as an office where securities transactions are done. According to FINRA rules, this office is - An office of convenience is defined as a location where an associated person occasionally and exclusively by appointment meets with customers, provided such location is not held out to the public as an office where securities transactions are completed. To maintain this status, this office cannot have regular business hours or be held out to the public as place where securities transactions are completed. Final approval and execution of transactions completed at an office of convenience must be done through a registered branch office.

Chapter 19: All of the following statements about the Insider Trading and Securities Fraud Enforcement Act of 1988 are correct EXCEPT...