Series 24 crunch time facts
Chapter 1 - correct answer ✔✔o The Effective Date of an IPO is determined by the SEC (NOT FINRA or
the issuer).
o If the SEC sues an issuer and underwriter for false statements and/or material omissions in a
prospectus, the customer may still file a lawsuit against both the issuer and the underwriter.
o What would preclude an issuer from obtaining WKSI status? Involvement in bankruptcy in the past 3
years.
o Prospectus Delivery requirement for a Reporting Company follow-on offering is 0 days from the
offering date.
o Prospectus Delivery requirement for an IPO that will be listed is 25 days from the effective date.
o Prospectus Delivery requirement for an unlisted follow-on offering is 40 days from the effective date.
o Prospectus Delivery requirement for an IPO that will NOT be listed is 90 days from the effective date.
o An issuer that loses its WKSI status after filing an Automatic Shelf Registration (ASR) may continue that
offering until the next Form 10-K is filed.
o A registered representative (RR) receives a check from a client to reserve shares of an IPO during the
cooling-off period. What do you instruct the RR to do? Return the check.
o Reg. A (maximum of $5 million) offerings can be offered to the public.
o Reg A+ permits offerings of up to $50 million
o The look-back period for a Reg. A offering is 12 months.
o A Reg. 147 offering is restricted from out of state resales for 9 months.
o A partnership may purchase a 147 offering even if some partners are not in-state residents.
o Reg. D buyers sign an investment letter (typically agreeing to a 6 month lock-up period) .
o Private placement/Reg. D--Issuers must issue stop transfer instructions to transfer agent to ensure that
no illegal sales take place.
o Can a Purchaser's Representative be affiliated with the issuer? No, unless the representative is related
to the investor.
o If a partner
Chapter 2 - correct answer ✔✔o A tender offer is NOT considered to be a type of distribution.
, o Foreign broker-dealers may join a syndicate to sell outside of the U.S. even if they are not FINRA
members.
o An Escrow Account is NOT required for a Firm-Commitment underwriting.
o All-or-none and mini-maxi are contingencies. Contingent underwritings require an escrow account.
o A Market-Out clause protects the underwriter from event risk during the underwriting.
o A Section 11 (Due Diligence) defense protects the underwriter from false statements made by the
issuer in offering documents.
o The final settlement of a syndicate account must occur within 90 days following the date on which the
securities are delivered to the underwriter.
o Underwriting compensation of options or warrants with duration of greater than 5 years is considered
unreasonable.
o Securities received as underwriting compensation are restricted for 6 months from the effective date.
o FINRA's Corporate Financing Rule requires the filing of the underwriting agreement (if not eligible for
an exemption).
o When might the participation of a qualified independent underwriter be required? When there is a
conflict of interest involving the issuer and underwriter of a security.
o The Reg. M exemption applies to actively traded securities (ADTV $1MM and MV of public float
$150MM).
o Reg. M Passive Market Making is allowed up to the Daily Purchase Limit.
o Reg. M stabilizing bids are allowed to remain in effect for an unlimited period.
o Your firm enters a stabilizing bid, then the independent market maker moves its bid down. You can
maintain your bid.
For more information Call 800 STC-1223 or visit www.stcusa.com ©Securities Training Corporation. All
Rights Reserved v3
o The sales concession is lost under a penalty bid.
o An investor who shorts a security of an issuer that is distributing add
Chapter 3 - correct answer ✔✔o Under Sarbanes-Oxley (SARBOX), both the Chief (Principal) Executive
Officer (CEO) and Chief (Principal) Financial Officer(CFO) must certify the information contained in Form
10-Qs and 10-Ks.
o Companies can execute a going private transaction if they get below 300 shareholders.
o Going-private transactions save on Forms 10-Q, 10-K, 8-K filing costs.
o Insiders may be short against the box for up to 20 days to clear stock through legal.
Chapter 1 - correct answer ✔✔o The Effective Date of an IPO is determined by the SEC (NOT FINRA or
the issuer).
o If the SEC sues an issuer and underwriter for false statements and/or material omissions in a
prospectus, the customer may still file a lawsuit against both the issuer and the underwriter.
o What would preclude an issuer from obtaining WKSI status? Involvement in bankruptcy in the past 3
years.
o Prospectus Delivery requirement for a Reporting Company follow-on offering is 0 days from the
offering date.
o Prospectus Delivery requirement for an IPO that will be listed is 25 days from the effective date.
o Prospectus Delivery requirement for an unlisted follow-on offering is 40 days from the effective date.
o Prospectus Delivery requirement for an IPO that will NOT be listed is 90 days from the effective date.
o An issuer that loses its WKSI status after filing an Automatic Shelf Registration (ASR) may continue that
offering until the next Form 10-K is filed.
o A registered representative (RR) receives a check from a client to reserve shares of an IPO during the
cooling-off period. What do you instruct the RR to do? Return the check.
o Reg. A (maximum of $5 million) offerings can be offered to the public.
o Reg A+ permits offerings of up to $50 million
o The look-back period for a Reg. A offering is 12 months.
o A Reg. 147 offering is restricted from out of state resales for 9 months.
o A partnership may purchase a 147 offering even if some partners are not in-state residents.
o Reg. D buyers sign an investment letter (typically agreeing to a 6 month lock-up period) .
o Private placement/Reg. D--Issuers must issue stop transfer instructions to transfer agent to ensure that
no illegal sales take place.
o Can a Purchaser's Representative be affiliated with the issuer? No, unless the representative is related
to the investor.
o If a partner
Chapter 2 - correct answer ✔✔o A tender offer is NOT considered to be a type of distribution.
, o Foreign broker-dealers may join a syndicate to sell outside of the U.S. even if they are not FINRA
members.
o An Escrow Account is NOT required for a Firm-Commitment underwriting.
o All-or-none and mini-maxi are contingencies. Contingent underwritings require an escrow account.
o A Market-Out clause protects the underwriter from event risk during the underwriting.
o A Section 11 (Due Diligence) defense protects the underwriter from false statements made by the
issuer in offering documents.
o The final settlement of a syndicate account must occur within 90 days following the date on which the
securities are delivered to the underwriter.
o Underwriting compensation of options or warrants with duration of greater than 5 years is considered
unreasonable.
o Securities received as underwriting compensation are restricted for 6 months from the effective date.
o FINRA's Corporate Financing Rule requires the filing of the underwriting agreement (if not eligible for
an exemption).
o When might the participation of a qualified independent underwriter be required? When there is a
conflict of interest involving the issuer and underwriter of a security.
o The Reg. M exemption applies to actively traded securities (ADTV $1MM and MV of public float
$150MM).
o Reg. M Passive Market Making is allowed up to the Daily Purchase Limit.
o Reg. M stabilizing bids are allowed to remain in effect for an unlimited period.
o Your firm enters a stabilizing bid, then the independent market maker moves its bid down. You can
maintain your bid.
For more information Call 800 STC-1223 or visit www.stcusa.com ©Securities Training Corporation. All
Rights Reserved v3
o The sales concession is lost under a penalty bid.
o An investor who shorts a security of an issuer that is distributing add
Chapter 3 - correct answer ✔✔o Under Sarbanes-Oxley (SARBOX), both the Chief (Principal) Executive
Officer (CEO) and Chief (Principal) Financial Officer(CFO) must certify the information contained in Form
10-Qs and 10-Ks.
o Companies can execute a going private transaction if they get below 300 shareholders.
o Going-private transactions save on Forms 10-Q, 10-K, 8-K filing costs.
o Insiders may be short against the box for up to 20 days to clear stock through legal.
