Series 79 CH 10: Syndicate Settlement And Regulati
Series 79 CH 10: Syndicate Settlement and Regulati
Exam (elaborations)
Series 79 CH 10: Syndicate Settlement and Regulations || with Complete Solutions.
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Course
Series 79 CH 10: Syndicate Settlement and Regulati
Institution
Series 79 CH 10: Syndicate Settlement And Regulati
Prospectus delivery requirements correct answers -securities may not be sold or delivered in connection with these transactions unless accompanied or preceded by a prospectus
-preceded means prior to the vote of security holders
Underwriting agreement correct answers -written contract between i...
Series 79 CH 10: Syndicate Settlement and Regulations ||
with Complete Solutions.
Prospectus delivery requirements correct answers -securities may not be sold or delivered in
connection with these transactions unless accompanied or preceded by a prospectus
-preceded means prior to the vote of security holders
Underwriting agreement correct answers -written contract between issuer and investment
banking firm in syndicate
-spread, over-allotment options, warrants to underwriters, right of first refusal, costs each party
will be responsible for
AAU correct answers -syndicate contract, master underwriting agreement, or purchase group
agreement
-lead manager, authority for form selling group, expected terms of offering, each underwriters
responsiblities and liabilities
-allocates shares, and describes retentions
Corporate financing rule correct answers -regulates underwriting terms of most public offerings
-have to file specific documents with FINRA's corporate financing department
-before deal can happen, BD has to receive the go from finra
Corporate financing rule parts correct answers -3 copies of UA, AAU and related agreements
-final registration statement
-list of underwriting syndicate members
-statement of any association or affiliation by a member with any officer or director of issuer
-explanation of any arrangements entered into by firm and issuer during 80 day period
Underwriting comp correct answers -FINRA will exam if compensation is fair and reasonable
-review all of items of value underwriter is receiving:
Items of value correct answers -spread
-fees
-securities
-reimbursements for expenses that are issuer expenses
-right of first refusal
FINRA prohibited arrangements correct answers -reimbursement for general overhead
-any right of first refusal lasting more than 3 years
-cinvertible securities lasting more than 5 years
-any tail fees lasting more than 2 years
Road show includes correct answers -PPT that stick to facts
-copy of most recent red herring for each investor
-don't hand out private company info
, -don't show internal docs
-no media reps
-no research analysts
During offering period, communications should be coordinated so that: correct answers -follow
customary formats
-avoid forecasts
-do not mention proposed public offering
-do not speculate on when registration becomes effective
During cooling off period correct answers -can't hint at when the IPO is happening, but EGC are
allowed to test the waters
Offerings at the market correct answers -cannot say that securities are offered at the market,
unless such a market exists and has not been made by syndicate
-SEC deems this as manipulative
Exemptions from state registration correct answers -securities listed on national exchanges do
not have to register with state
-still have to comply with state laws though
Fixed price offerings correct answers -lead manager sets the public offering price prior to
publication of prospectus, and without regard to book building activity
-cannot sell to an investor at a discounted price if doing this
Fully marketed offering correct answers -consists of a couple week road show
-greatest risk of not generating enough interest
-most common
On-day marketed offering correct answers -issuer files a registration statement 24 hours before
the anticipated effective date and prices the deal after the close of trading the next day
-usually used with follow on equity sales
Overnight marketed offering correct answers -file registration right before close, and requet
effectiveness the next day before markets open
-least risk
Conflict of interest occurs if correct answers -issuer is a BD
-issuer is owned at least 10% by BD
-issuer owned by at least 10% of associated person
-issuer will use at least 5% of proceeds to pay BD
-issuer intends to become a BD
If conflict of interest, can't participate unless correct answers -nature of conflict is prominently
disclosed
-member complies with certain net capital, discretionary account, and filing requirements
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