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Series 24 - 1(B) questions and answers rated A+ passed
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Series 24 - 1(B)A Florida investor purchases securities under a Rule 147 offering. After six months he may:
A) Only sell the shares to a customer who a resident of the state
B) Sell the shares to out-of-state customers
C) Only sell the shares to an accredited investor
D) Only sell the shares to a QIB - correct answer ✔✔B) Sell the shares to out-of-state customers
EC Rule 147 covers an exemption from registration for the sale of securities on an intrastate basis. A
purchaser of stock under Rule 147 is not allowed to sell the securities to a nonresident of the state for a
period of six months following the last date of sale by the issuer. This restriction is removed after six
months. Individuals who wish to sell the securities prior to six months may do so only to a resident of the
same state. (88617)
Which of the following statements is TRUE concerning stabilization?
A) An unlimited number of shares may be purchased
B) There may be 2 or more stabilizing bids
C) The managing underwriter may only purchase up to 15% of the deal due to Green Shoe restrictions
D) Stabilizing is only permitted for follow-on offerings in listed securities - correct answer ✔✔A) An
unlimited number of shares may be purchased
The SEC defines stabilizing as the placing of any bid or the effecting of any purchase for the purpose of
pegging, fixing, or otherwise maintaining the price of a security. As its definition implies, the act of
stabilizing is manipulative. However, if performed in accordance with Rule 104 of Regulation M,
stabilizing is allowed so that the benefits of an orderly distribution of securities can be realized.
The highest price at which a stabilizing bid could be entered is the public offering price. The syndicate
may only have one (not multiple) stabilizing bids, which is generally placed by the manager. Although
there is only one stabilizing bid permitted, there is no limit as to the number of stabilizing purchases that
may be made. The managing underwriter is required to notify the principal market that it will be placing
a stabilizing bid. In addition, under Rule 104, stabilizing is prohibited in an at-the-market offering.
(82344)
If an investor purchased securities through an underwriter in a public offering, he's in violation of
Regulation M if he sold the securities short within how many days preceding the pricing?
, A) No more than one business day
B) No more than two business days
C) No more than five business days
D) No more than 10 business days - correct answer ✔✔C) No more than five business days
Rule 105 of Regulation M stipulates that it's a violation for any person to sell a security short that's the
subject of an offering and then purchase the offered security from the underwriter if the short sale was
executed during the period that begins five business days prior to the pricing of the offering and ends
with the pricing of the issue. If the pricing of the offering occurs within five business days of the filing of
the registration statement, then the Rule 105 restriction applies from the filing date until the pricing of
the issue. (39230)
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. (82326)
ZZZ Corp., an emerging growth company issuer has just launched its IPO and the offering was supported
in part by ABC broker-dealer, a selling group member. When may ABC publish research on ZZZ Corp.?
A) Immediately as syndicate members are not restricted
B) After 3 days
C) After 10 days
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