Series 7 Regulations ACTUAL Exam
Questions and CORRECT Answers
Rule 147 - CORRECT ANSWER - the SEC rule that spells out requirements for the
intrastare exemption
-100% of issue bought by residents of that state
-9 months till issue can be made outside state
Private Placement - CORRECT ANSWER - an exempt transaction under Regulation D
that can be sold without a prospectus to an unlimited number of wealthy investors, and limited to
a max of 35 poor investors
"Accredited Investor" - CORRECT ANSWER - a purchaser of a private placement who
has a net worth of at least 1,000,000 or annual income of 200,000 for two years, an officer of
director of the issuer, or is an institution w/ 5M or more without purpose of investing
Offering Memorandum - CORRECT ANSWER - also called Private Placement
memorandum, the disclosure document used in connection w/ a regulation D placement offering
Regulation A - CORRECT ANSWER - exempt transaction under the 1933 that permits a
non-exempt issuer to issue up to 5M worth of securities each year and remain exempt from
having to register the securities with the sec
Restricted Stock - CORRECT ANSWER - stock usually issued directly to the officers or
directors of a corporation in a private placement, that has not been registered by the SEC
-Reg D, exempt
-resales must comply with Rule 144
Rule 144 - CORRECT ANSWER - SEC rule that permits the holders of private placement
"restricted" shares to resell these securities in the public markets without filing a registration
statement if the issuer has gone public
, -fully paid and held for 6 months
-filing is 9responsibility of seller , filed at or prior to the time that sell order is placed
Maximum Permitted Sal for Rule 144 - CORRECT ANSWER - Every 90 days Greater of:
-1% of outstanding shares
-weekly average of the immediately preceding 4 weeks trading volume
Controlled Stock - CORRECT ANSWER - registered shares purchased in the open market
by officers and directors of the issuer
To sell 144 you need: - CORRECT ANSWER - -Issuers representation
-Seller's Representation
Broker's Representation
Rule 144A - CORRECT ANSWER - permits large private placement offerings to be made
to Qualified Institutional Buyers who may trade these securities among themselves without
having to register the securities
Rule 145 - CORRECT ANSWER - Requires issuers to file registration statements with the
sec when securities are created because of merger, divestiture, or spin-off
SEC 1934 regulates what securities? - CORRECT ANSWER - Securities transactions and
securities brokers
Acts under SEC - CORRECT ANSWER - Securities Act of 1933, Trust Indenture Act of
1939, Investment Company Act of 1940
Rule 15a-6 - CORRECT ANSWER - Foreign broker dealers can engage in limited
activities in the US without SEC registration
Questions and CORRECT Answers
Rule 147 - CORRECT ANSWER - the SEC rule that spells out requirements for the
intrastare exemption
-100% of issue bought by residents of that state
-9 months till issue can be made outside state
Private Placement - CORRECT ANSWER - an exempt transaction under Regulation D
that can be sold without a prospectus to an unlimited number of wealthy investors, and limited to
a max of 35 poor investors
"Accredited Investor" - CORRECT ANSWER - a purchaser of a private placement who
has a net worth of at least 1,000,000 or annual income of 200,000 for two years, an officer of
director of the issuer, or is an institution w/ 5M or more without purpose of investing
Offering Memorandum - CORRECT ANSWER - also called Private Placement
memorandum, the disclosure document used in connection w/ a regulation D placement offering
Regulation A - CORRECT ANSWER - exempt transaction under the 1933 that permits a
non-exempt issuer to issue up to 5M worth of securities each year and remain exempt from
having to register the securities with the sec
Restricted Stock - CORRECT ANSWER - stock usually issued directly to the officers or
directors of a corporation in a private placement, that has not been registered by the SEC
-Reg D, exempt
-resales must comply with Rule 144
Rule 144 - CORRECT ANSWER - SEC rule that permits the holders of private placement
"restricted" shares to resell these securities in the public markets without filing a registration
statement if the issuer has gone public
, -fully paid and held for 6 months
-filing is 9responsibility of seller , filed at or prior to the time that sell order is placed
Maximum Permitted Sal for Rule 144 - CORRECT ANSWER - Every 90 days Greater of:
-1% of outstanding shares
-weekly average of the immediately preceding 4 weeks trading volume
Controlled Stock - CORRECT ANSWER - registered shares purchased in the open market
by officers and directors of the issuer
To sell 144 you need: - CORRECT ANSWER - -Issuers representation
-Seller's Representation
Broker's Representation
Rule 144A - CORRECT ANSWER - permits large private placement offerings to be made
to Qualified Institutional Buyers who may trade these securities among themselves without
having to register the securities
Rule 145 - CORRECT ANSWER - Requires issuers to file registration statements with the
sec when securities are created because of merger, divestiture, or spin-off
SEC 1934 regulates what securities? - CORRECT ANSWER - Securities transactions and
securities brokers
Acts under SEC - CORRECT ANSWER - Securities Act of 1933, Trust Indenture Act of
1939, Investment Company Act of 1940
Rule 15a-6 - CORRECT ANSWER - Foreign broker dealers can engage in limited
activities in the US without SEC registration
