Progress Exam 1B - Series 24
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.
Regulation FD applies to:
A. Issuers.
B. Broker dealers.
C. Form 4 filers.
D. Research personnel only. - correct answer ✔A. Issuers.
Regulation FD applies to issuers of securities. Regulation FD requires that
material, non-public information disclosed to analysts or other investors must
be made public. If the disclosure is intentional, the information must be
simultaneously disclosed to the public. If the disclosure is unintentional, the
public disclosure must be made within 24 hours. A Form 8-K, filed with the
SEC, is one method of meeting the public disclosure requirement.
Broker-Dealer X is participating in the distribution of an equity IPO. Broker-
Dealer X is prohibited from selling any shares to which of the following
accounts?
A. Uniform Transfers to Minors Accounts.
B. Retirement plans.
C. An account purchasing on margin.
, D. WRAP customers. - correct answer ✔C. An account purchasing on
margin.
Distribution participants may not sell issues on margin. The securities (if
considered marginable by the Fed) would be eligible to be used as collateral
in a margin account only after being held for 30 days. Under industry rules,
registered representatives employed at a limited broker-dealer are not
restricted from purchasing new issues.
A corporation is about to issue an IPO on the OTCBB. A broker-dealer selling
the securities in the aftermarket is required to deliver a prospectus to
purchasers within how many days following the effective date of registration?
A. 25.
B. 40.
C. 90.
D. 120. - correct answer ✔C. 90 days.
A dealer selling securities in the secondary market must provide prospectuses
to customers if new securities of that class were recently sold by the issuer
under a registration statement. Prospectuses must be delivered within 40
days after the effective date in the case of issuers with publicly traded
securities already outstanding, or 90 days for IPOs.
A Florida investor purchases securities under a Rule 147 offering. After six
months he may:
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.
Regulation FD applies to:
A. Issuers.
B. Broker dealers.
C. Form 4 filers.
D. Research personnel only. - correct answer ✔A. Issuers.
Regulation FD applies to issuers of securities. Regulation FD requires that
material, non-public information disclosed to analysts or other investors must
be made public. If the disclosure is intentional, the information must be
simultaneously disclosed to the public. If the disclosure is unintentional, the
public disclosure must be made within 24 hours. A Form 8-K, filed with the
SEC, is one method of meeting the public disclosure requirement.
Broker-Dealer X is participating in the distribution of an equity IPO. Broker-
Dealer X is prohibited from selling any shares to which of the following
accounts?
A. Uniform Transfers to Minors Accounts.
B. Retirement plans.
C. An account purchasing on margin.
, D. WRAP customers. - correct answer ✔C. An account purchasing on
margin.
Distribution participants may not sell issues on margin. The securities (if
considered marginable by the Fed) would be eligible to be used as collateral
in a margin account only after being held for 30 days. Under industry rules,
registered representatives employed at a limited broker-dealer are not
restricted from purchasing new issues.
A corporation is about to issue an IPO on the OTCBB. A broker-dealer selling
the securities in the aftermarket is required to deliver a prospectus to
purchasers within how many days following the effective date of registration?
A. 25.
B. 40.
C. 90.
D. 120. - correct answer ✔C. 90 days.
A dealer selling securities in the secondary market must provide prospectuses
to customers if new securities of that class were recently sold by the issuer
under a registration statement. Prospectuses must be delivered within 40
days after the effective date in the case of issuers with publicly traded
securities already outstanding, or 90 days for IPOs.
A Florida investor purchases securities under a Rule 147 offering. After six
months he may:
