What are exempt securities and exempt transactions?Certain types of securities and certain transactions are deemed by the SEC to be exempt from registration requirements. Show
Exempt Security - Common types of exempt securities are government securities, bank securities, high-quality debt instruments, non-profit securities, and insurance contracts. Most important for private, for-profit companies is the broad exemption under Section 4 of the 33 Act of transactions by an issuer not involving any public offering. This is known as a private offering. A private offering is generally for a lesser amount of money that is invested by a small number or closely-related investors. Note: The exempt type of security never has to be registered, even if it is resold following the issuance. Exempt Transaction - An exempt transaction is a transaction that does not warrant full-blown registration. Exempt transactions generally involve either a limited amount of capital or sophisticated or accredited investors. Note: A security sold in an exempt transaction may have to be registered to avoid violating the 33 Act if resold within a short period of time. Next Article: What are Restricted Securities? Back to: SECURITIES LAW Related Topics
Discussion QuestionWhy do you think the securities laws exempt certain securities from regulations and certain types of transactions for regulation? How is your reasoning influenced by the underlying goals of the securities regulations? Practice QuestionWhat is an exempt transaction and an exempt security and why does this designation matter? Academic ResearchAll of the following statements are true about the Securities Act of 1933 EXCEPT that it requires the registration of non-exempt new issue offerings in each State where the security will be sold. All of the following statements are true about the Securities Act of 1933
A broker-dealer participates in the distribution of a new issue on a best efforts basis, receiving an underwriting fee from the issuer. The broker-dealer is acting as agent for the issuer and as an underwriter of the securities The Securities Act of 1933 requires that new issues of securities be registered with the SEC if the mails, or other means of interstate commerce, are used to sell the securities Under the Securities Act of 1933, signatures will be obtained by which of the following persons involved in an underwriting?
Which of the following activities are allowed prior to the filing of a registration statement? Prior to the filing of a registration statement for a new issue, nothing can be done. Once the registration statement is filed, a preliminary prospectus can be sent; indications of interest can be accepted; and a "tombstone" announcement can be published. Once the registration is effective, orders can be accepted if customers receive the final prospectus, at or prior to, confirmation of sale. If an issuer files a registration statement with the SEC under the Securities Act of 1933, registration is effective no earlier than 20 days from the filing date Once registration is effective for a non-exempt new issue, customers that previously received a preliminary prospectus during the 20-day cooling off period are contacted by the underwriter to see if they wish to purchase the issue Which of the following statements are TRUE regarding indications of interest received during the "cooling off" period for a registered initial public offering? The indication is not binding on the customer or underwriter Under the Securities Act of 1933, omissions or misstatements of material fact in a registration statement can be considered to be fraudulent for the Begins once registration filed - SEC reviews for "Full and Fair Disclosure" - Until Disclosures are adequate, Registration is Not Effective. All Persons signing registration are liable for Omissions or Misstatements. Fraud is fraud is fraud. Omissions or misstatements of material fact in a registration statement or prospectus for an issue registered under the Securities Act of 1933 can be fraud for everyone involved. If the SEC sends a deficiency letter to the issuer regarding an issue in registration disclosure is not considered to be adequate In connection with a new issue offering, a broker-dealer would be permitted to send which of the following to a customer if it were accompanied by a copy of the final prospectus? Delivery of prospectuses cannot be accompanied by promotional material of any type. The only information that can accompany a prospectus would be a "tombstone;" or information that has been filed with the SEC - such as audited financial reports. An order to buy a new issue that has not been registered with the SEC can be accepted if the issue is Which of the following are exempt issues under the Securities Act of 1933?
Under the Securities Act of 1933, commercial paper is an exempt security if the security represents the non-convertible debt obligation of the issuer and/or the security is issued with a maximum maturity of 9 months The sale of securities by a State chartered bank is exempt from both SEC and State
registration "Intrastate offerings" are exempt transactions under the Securities Act of 1933 under the provisions of Which of the following is NOT an accredited investor under Regulation D of the Securities Act of 1933? Registered Investment Adviser Which of the following is an accredited investor under Regulation D of the Securities Act of 1933?
Under the provisions of Regulation D, which of the following are accredited investors?
A $25,000,000 offering of limited partnership units is being made under Rule 506. So far, 25 people have been solicited to make an investment of a minimum of $500,000. A potential client is interested, but she only has $200,000 available for investment. The client should be told that she cannot become a limited partner. Rule 506 is the main private placement rule under Regulation D. It permits the offering of any dollar amount of securities to a maximum of 35 non-accredited investors and an unlimited number of accredited (wealthy) investors. Regulation D offerings typically have high investment minimums to keep out unsophisticated, unqualified, unwealthy individuals. Here, the minimum investment amount is set by the sponsor at $500,000. If you don't have that much to invest, you are shut out. The maximum permitted dollar amount that can be raised in a Private Placement under Rule 504 of Regulation D is Which statements are TRUE about Regulation D? Rule 504 & 506 max/min
A first time offering of securities to be sold only to residents of a particular state is exempt from
A Regulation A offering is given a simpler method of registration with the SEC for new issue offerings that do not exceedTerm $50,000,000 within a 12 month period . Regulation A under the Securities Act of 1933 gives an "EZ" registration method to issues of no more than $50,000,000. The provisions of the Securities Exchange Act of 1934 apply to all of the following activities
The provisions of the Securities Exchange Act of 1934 apply to which of the following activities?
All of the following statements are true regarding the appointment of SEC commissioners
The Securities Exchange Act of 1934 requires that
Under the Securities Exchange Act of 1934, the SEC can suspend trading in the securities markets if it gives prior notice to the President of the United States A securities firm that stands ready to buy and sell a security for its own account is a(n) All of the following would be considered to be securities information processors under the Securities Exchange Act of 1934
Under the Securities Exchange Act of 1934, which of the following MUST register with the Securities and Exchange Commission?
Which of the following are national securities exchanges that MUST register with the SEC? each national securities exchange register with the SEC Under the Securities Exchange Act of 1934, member firms are responsible for which of the following?
The financial leverage of a broker-dealer would be measured by its Ratio of Loans to Net Capital A broker-dealer MUST maintain physical possession of which of the following? Securities held as collateral for derivative trading components Jane is a Registered Investment Adviser. She hears from an inside source at ABC Corporation that the upcoming quarterly earnings report will show a loss. Most analysts have been estimating record earnings for ABC Corporation. Based on this information, she sells her ABC shares; and informs Bob, her largest client, of the information. Based on this information, Bob sells his holding in ABC Corporation as well. Who has violated the Securities Exchange Act of 1934? Which of the following issuers MUST report to the SEC under the Securities Exchange Act of 1934? Only corporations and investment companies (which are either corporations or trusts) file annual and semi-annual reports with the SEC. Municipal and federal issuers are exempt from the Act of 1934. All of the following are included in the 10K report filed by corporate issuers with the SEC
If a 13d filing is required, notice must be filed with the Securities and Exchange Commission within If a person accumulates a 5% or greater holding in a publicly held company with the intention of exercising control Form 13d must be filed within 10 business days Reports filed by issuers with the SEC under the Securities Exchange Act of 1934 are made available to
If an investment adviser acquires a 5% or greater holding in a publicly held company, it MUST file a 13g report if the purchases were for either its proprietary account or its customer accounts and it intends to remain a passive investor Under the Securities Exchange Act of 1934, which of the following statements are TRUE regarding an investment manager that has discretion over customer assets? Investment managers who have discretion over $100,000,000 of customer assets must file Form 13F. The Securities Exchange Act of 1934 requires investment managers that have discretion over $100,000,000 or more of customer assets to file a Form 13F with the SEC. The Form 13F is filed 45 days after the quarter ending where the adviser, at the end of any month in that quarter, had $100,000,000 or more of customer assets with discretionary authority. Under the provisions of the Securities Exchange Act of 1934, margin on securities is set by the Board of Governors of the Federal Reserve System Which of the following can be purchased on margin? NASDAQ issues and futures Which of the following are covered under the Securities Exchange Act of 1934?
All of the following must register with the SEC as an investment company under the Investment Company Act of 1940 The Investment Company Act of 1940 requires that investment companies (management companies, unit investment trusts and face amount certificate companies) register with the SEC. If a company has 100 shareholders and $100,000 of initial capital with the purpose of investing in securities, this company The Investment Company Act of 1940 requires the registration of investment companies that have 100 or more shareholders; and which have $100,000 or more initial capital. The Investment Company Act of 1940 permits an open-end management company to change its investment objective if shareholders approve Which statements are TRUE regarding closed-end management companies? The initial offering of shares is made under a prospectus. Shares trade in the secondary market at prevailing market prices Which of the following securities trades in the market at a price that is different than NAV? To be defined as a diversified management company, a fund must have at least what percentage of its assets invested in securities? 75%, no more than 5% of assets invested in a single issuer; with no holding representing more than 10% of the voting stock of that issuer. Under the Investment Company Act of 1940, an affiliated person is prohibited from doing which of the following activities?
Which of the following is a conflict of interest for an affiliated person on the Board of Directors of a mutual fund? The affiliated person being compensated by the broker-dealer that the fund uses to execute portfolio transactions Under the Investment Company Act of 1940, what percentage of a management company's Board of Directors can be affiliated with the investment company? Which of the following statements are TRUE about the Investment Company Act of 1940's requirements for management companies? -At least 40% of the Board of Directors must be "non-interested" persons -To establish a fund, a minimum of $100,000 of Total Net Assets is required Under the Investment Company Act of 1940, the investment adviser's contract must be renewed by a majority vote of the fund's Board of Directors or the outstanding shares Under the Investment Company Act of 1940, a customer wishing to sell mutual fund shares held for over 3 years receives the next computed net asset value The Net Asset Value (NAV) of a mutual fund is the market value of all securities holding calculated as of market close minus liabilities of the fund divided by the number of outstanding shares Mutual fund closing and opening price
SEC Rule 12b-1 allows open-end investment companies to charge an annual fee for soliciting new investment into the fund against total net assets of the fund Which of the following investments are affected by 12b-1 fees and sales loads? Which of the following investment companies can adopt a 12b-1 plan? What is the difference between Class A and Class B stock in a pooled investment vehicle? Class A stock offers breakpoints while Class B stock does not An up-front sales charge reduced by breakpoints for larger purchases and no, or very low, annual 12b-1 fees. No up-front sales charge, instead a CDSC -Contingent Deferred Sales Charge is imposed that declines towards "0" over 6-7 years, however there are annual 12b-1 fees averaging .50%. No up front sales charge, usually no CDSC, but the fund charges the highest permitted annual 12b-1 fee of .75% annually. Investment companies are obligated to send their financial statement to shareholders Under the Investment Company Act of 1940, violations are punishable by which of the following? $10,000; and up to 5 years in jail. Which securities are nonMost securities, including the vast majority of stocks, are non-exempt.. Banks.. Savings institutions.. Trust companies.. Insurance companies.. Investment companies.. Pensions.. Profit sharing plans.. Financial institutions.. Which of the following securities is not exempt from the registration provisions of the Securities Act of 1933 quizlet?Which of the following securities is NOT exempt from the Securities Act of 1933? Industrial companies are not exempt - their securities must be registered and sold with a prospectus.
Which of the following securities are exempt for the registration requirement of the Securities Act of 1933?Certain types of securities and certain transactions are deemed by the SEC to be exempt from registration requirements. Exempt Security - Common types of exempt securities are government securities, bank securities, high-quality debt instruments, non-profit securities, and insurance contracts.
Are US government securities exempt from 1933 Act?U.S. government securities — Treasuries — and municipal bonds are all exempt from registration.
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Which of the following are non-exempt securities under the securities act of 1933?
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