Series 79 Exam Review Questions
A person who has not been registered for the past three years has now become newly registered
with another broker-dealer. With regard to Regulatory Element, this representative... - ANS
...
Series 79 Exam Review Questions
A person who has not been registered for the past three years has now become newly registered
with another broker-dealer. With regard to Regulatory Element, this representative... - ANS - 1)
Must take the appropriate module as if subject the program for the first time
2) Must complete the Regulatory Element within a 120-day period that begins with the second
anniversary of their registration
NOTE:
- have to re-do if you have left the securities industry for more than 2 YEARS
- the program is completed 120 days after the second anniversary after initial registration but
THREE YEARS thereafter
At what point during the sale process does the financing provider typically commit to the final
staple terms and conditions? - ANS - During the second round of the sale process, prior to
submission of final bids.
When is a Schedule 14-D9 supposed to be filed? - ANS - Within 10 business days of a Schedule
TO Filing
-
Proxy statement - ANS - In a one-step merger transaction, the target obtains approval from its
shareholders through a vote at a shareholder meeting - prior to the vote, the target provides
appropriate disclosure to the shareholders via a proxy statement.
Contains a summary of the background/terms of the transaction, a description of the financial
analysis underlying the fairness opinions of the financial advisers, a copy of the definitive
agreement, and summary and pro forma financial data.
Proxy statement is filed with the SEC under the codes PREM14A and DEFM14A
Schedule TO - ANS - Filing made after the acquirer mails an offer to purchase to the target's
shareholder's for a tender offer.
In response to the tender offer, the target files a Schedule 14D-9 within 10 business days of
commencement which contains a recommendation from the target's board of directors on how to
respond to the tender offer, typically includes a fairness opinion
NOTE: Schedule TO filed by ACQUIRER
vs. Schedule 14-D9 filed by TARGET
Schedule 13D - ANS - Required for anyone who acquires more than 5% of a voting class of a
public company's common stock. In addition to acquirers, it may be required of traders and
arbitrageurs who participate in tenders for profit
Schedule 14(d) - ANS - Required under the '33 Act, provides public information about entities
involved in tenders, other than the acquirer
Regulation A - ANS - A public offering is EXEMPT from SEC registration if the amount of
securities offered does not exceed $5 million in any 12 month period
- permits shareholders to sell up to 1.5 million of securities - this sale counts against the 5 million
total
- if you claim this exception you must file an offering statement with the SEC for review
(consists of notification, offering circular, and exhibits)
Advantages: financial statements are simpler & do not need to be audited, there are no Exchange
Act reporting obligations unless the company has more than $10mm in total assets, Filing with
the SEC is less expensive than with the normal process
Regulation A+ - ANS - Two tiers of registration exempt offerings:
Tier 1: eligible issues may offer and sell up to $20mm of securities in a 12 month period of
which no more than $6mm may constitute secondary sales by security holders
Tier 2: Issuers may offer and sell up to $50mm of securities in a 12 month period of which no
more than $15mm may constitute secondary sales by affiliates
Both must be accompanied by financial statements for the previous 2 fiscal years. Tier 2 must be
audited and requires annual reports to be filed.
Rule 147 - ANS - = Intrastate offering exemption
- Applies to companies that are incorporated in the state where the securities are to be offered,
carry out a significant amount of their business in that state (has principal office located in state,
derives 80% of gross revenues in past 6 months from state, has 80% of assets located in that
state, uses 80% of proceeds from offering to operate within state), and offer and sell their
securities only to residents of that state
Regulation D - ANS - D FOR DEBT
Establishes three exemptions from registration for private placements of equity and debt
securities. Requires the issuing company to file a notice (Form D) with SEC within 15 days of
the first sales of securities
- allows sales to an unlimited number of accredited investors and up to 35 non-accredited
investors
Accredited investor - ANS - Includes:
- officers and directors of the issuer
- institutions with assets of $5mm and with have legitimate business purposes
- individuals with $200K of net income ($300K if married) and in each of the last 2 years $1mm
net worth
Note:
- while banks, insurance companies, and others are accredited investors, there are certain
institutions (i.e. trusts) that need $5mm in assets to be accredited
- employees of the issuer are NOT accredited --> would NOT be solicited in a private placement
BAD ACTOR PROVISION - issuers cannot rely on private placement exemption if the issuer or
an individual associated with the issuer (i.e. predecessor, officer/director, beneficial owner of >
20% of equity securities, investment manager) has been convicted of a felony or securities
related misdemeanor in the past 10 years, has been subject to a securities related court injunction
in the previous 5 years, or subject to an order from a state securities commissioner barring
securities related activities
Regulation FD - ANS - FD = FAIR DISCLOSURE
Prevents the selective disclosure of material information about a publicly traded company to
outsiders prior to the time that the same information is generally available to all investors
Intentional disclosure --> broadly disclosed SIMULTANEOUSLY
Unintentional disclosure --> broadly disclosed PROMPTLY (24 later or the open of trading on
the next business day)
Disclose this via an 8K
Regulation M - ANS - M for MANIPULATION
- regulation M was enacted to prevent manipulative cond
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