Regulations Quiz

Front 1

To document accredited investors, a _______________________ must be completed and signed by the potential purchaser

Back 1

accredited investor questionnaire

Front 2

Investment companies, such as ___________ are non-exempt; therefore their securities must be registered and sold under a prospectus

Back 2

mutual funds

Front 3

US Gov issues, savings and loan issues, and municipal issues are ___________________

Back 3

exempt

Front 4

Regulation A gives an issuer an exemption from registration for issues of _________ or less to be sold within a 12 month period

Back 4

5MM

Front 5

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

Back 5

Be sure to pay attention to "the preceding week"

Front 6

Regulation D permits a private placement to be sold to a maximum of ________________ NON-accredited investors and an _______________ number of accredited (wealthy and institutional)

Back 6

35 and unlimited

Front 7

Stabilizing bids are permitted at any time after registration become effective. it is placed ____________ or below the POP, NEVER ABOVE.

Back 7

At or below

Front 8

Stablizing bids must cease when the syndicate is broken by the manager. a "notice of stablization" myst be included in the ________________

Back 8

prospectus

Front 9

The determination of which stocks are marginable is made by the ______________

Back 9

FRB

the FRB decides which non-exempt securities are marginable. it has decided that all listed securities are marginable and OTC securities which it approves are marginable

Front 10

a 13D notice would be filed when an investor accumulates a ______________ or greater position in the common stock of an issuer

Back 10

5%

are required to file within 10 business days

Front 11

Under rule 10b-5-1, pre-arranged trading plans by insiders are:

Back 11

- permitted only if the provisions cannot be altered during the plan's life

- give a safe harbor to officers and directors against an "insider trading" prosecution if the plan is followed

Front 12

the FTC act of 1991 requires that UNsolicited calls cannot be made before 8am and after 9pm.

Back 12

UNsolicited

Front 13

If an analyst fails to make the required certification, FINRA must be notified; and for the next 120 days, any research reports authored by that analyst must include the disclosure that the analyst did not provide the required certification.

Back 13

Regulation AC

Front 14

FINRA requires that when a private placement is offered, the broker-dealer or its representatives must conduct a reasonable investigation concerning that security and the issuer's representations about it.

Back 14

issuer and its management;

business prospects of the issuer;

assets held by the issuer;

claims being made; and

intended use of the proceeds of the offering.

Front 15

The Chairman of a bank municipal broker-dealer is on the town council involved in a negotiated municipal bond underwriting being performed by that municipal broker-dealer. Under MSRB rules, which statement is TRUE regarding disclosure of the relationship?

Back 15

The relationship must be disclosed to customers in writing no later than at confirmation of sale

Front 16

Options Sales Literature is any written communication distributed to customers or the public that contains any analysis, performance report, projection or recommendation. Included, as well, are standard forms of options worksheets (these detail gain, loss, and breakeven for a given strategy to be employed by a customer), and seminar texts for lectures to be given to the public about options. Sales literature must be accompanied or preceded by an Options Disclosure Document.

Back 16

Sales literature must be accompanied or preceded by an Options Disclosure Document.

Front 17

Only the proceeds from the primary distribution will go to the company. The proceeds from the secondary distribution go to the selling shareholders.

Back 17

This is a combined primary and secondary distribution. The primary distribution of 300,000 shares consists of the newly issued shares where the proceeds will go to the issuer. The secondary distribution consists of the 200,000 shares being sold by officers

Front 18

Credit can be extended on new issues:

Back 18

after 30 days have elapsed from the completion of the offering

Front 19

An "accredited investor questionnaire" is required when which type of offering is made to investors?

Back 19

Regulation D - private placements

Front 20

An unaffiliated investor is permitted to sell "144" shares without being subject to the volume limitations:

Back 20

after holding the securities for 6 months

as long as the seller has been unaffiliated with the issuer for at least 3 months.

Front 21

Syndicate members that are not market makers are permitted to buy Tier 1 securities anytime prior to the effective date

Back 21

Syndicate members that are not market makers are restricted from buying Tier 3 securities for the 5 business day window of time prior to the effective date

Front 22

The Federal Reserve Board (FRB) only has the power to set margins for non-exempt issues. It has no power to set margins for exempt issues under the Securities Exchange Act of 1934. However, FINRA sets minimum margins for both exempt and non-exempt issues.

Back 22

FRB - Non exempt only for marginable

Front 23

Anti fraud - 1933 (issuers)

Back 23

Anti Fraud - 1934 (people)

Front 24

SEC Rule 10b-18

Back 24

Must be effected through 1 broker/dealer on any given day;

Cannot be the opening transaction;

Cannot be executed within 10 minutes of market close if the security is "actively traded," otherwise it cannot be executed within 30 minutes of market close;

Must be effected at prices no higher than the current market;

Cannot exceed 25% of the trading volume in the security that day (except for block purchases handled outside the normal flow of orders).

Front 25

Who maintains Do Not Call Lists?

Back 25

Member firm and FTC

Front 26

The FINRA 5% rule does not apply to transactions that require a prospectus

Back 26

TRUE

Front 27

Recommending the use of put options or repurchase agreements to protect against loss are both valid strategies and are permitted under MSRB rules

Back 27

MSRB rules

Front 28

The MSRB has no authority over municipal issuers. It regulates municipal brokers and dealers, including bank dealers in the municipal market.

Back 28

The MSRB has no authority over municipal issuers

Front 29

EMMA stands for Electronic Municipal Market Access. The EMMA web portal, run by the MSRB, makes available to the investing public:

Back 29

Official Statements, Preliminary Official Statements, Advance Refunding Documents, and Event Notices;

Real time reporting of municipal bond trades through RTRS (Real Time Reporting System);

Real time reporting of municipal note trades through SHORT (Short-Term Obligation Rate Transparency System).

Front 30

what must be disclosed in a COMPETITIVE bid?

Back 30

- offering price
- order priority provisions (PGDM)

Front 31

what must be disclosed in a NEGOTIATED bid?

Back 31

- offering price of each maturity
- spread

Front 32

Issuers of securities are prohibited from:

Back 32

selling calls on their own stock

Front 33

The President of PDQ Corporation donates restricted PDQ shares to the United Way after holding them for 3 years fully paid. United Way can sell the stock without restriction:

Back 33

immediately

as long as the 6 month holding period has been met on the restricted shares (officer held for 3 years) when they are donated, the charity can sell them immediately. there is no requirement that another 6 month hp be met

Front 34

Under Regulation D, purchasers of private placement offerings must be given full disclosure through a(n):

Back 34

Offering memorandum

Under Regulation D, purchasers of private placements must be given full disclosure about the issue, even though no prospectus is required (the issue is exempt). Disclosure is accomplished by providing the purchaser with a copy of an "Offering Circular," which for smaller private placements is called the "Offering Memorandum." There is no registration statement for private placements because they are exempt - the exemption is claimed by filing a Form D with the SEC.

Front 35

A customer has an account with a brokerage firm that is in receivership. The account holds $350,000 of securities and has a $150,000 debit. Which statement is TRUE regarding SIPC coverage?

Back 35

The account is covered for $200,000

SIPC covers the equity in a customer's account, with coverage not to exceed $500,000 equity per account in securities. However, cash coverage is limited to $250,000. This account has $350,000 of securities and a $150,000 debit, so the equity is $200,000. The customer will receive $200,000 worth of securities in the liquidation.

Front 36

Which of the following time stamps are on an order ticket?

Back 36

order entry,
order execution,
and order cancellation, if canceled.

Front 37

A customer wishes to open an account that will be used primarily to buy initial public offerings (IPOs). Which statement is TRUE regarding the proper procedure for prequalifying the account?

Back 37

The customer must sign a representation letter that he or she is not restricted from buying IPOs

Front 38

The primary criteria for a person to be appointed to a securities industry arbitration panel is that the person be:

Back 38

disinterested

Front 39

Research reports approved by a supervisory analyst must be kept by member firms for:

Back 39

3 years

Front 40

The Official Statement is:

Back 40

required to be delivered at or prior to settlement, if available

requested by underwriters to satisfy SEC due diligence requirements and the disclosure requirements of new issue purchasers

Front 41

Under MSRB rules, any claim, dispute, or controversy shall be submitted to arbitration at the instance of all of the following EXCEPT a:

Back 41

broker-dealer against a customer who has not previously signed an arbitration agreement

Front 42

Which of the following options communications must be approved by the designated Registered Options Principal prior to use?
I Advertising
II Sales literature
III Independently prepared reprints

Back 42

I, II, III