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31 Cards in this Set

  • Front
  • Back
Security Registration Process
Registration Statement = Filing Date ->

Cooling Period = 20 Days = Red Herring ->

Deficiency Letter OR Allowance ->

Registered Secondary Offering
Shareholders sell stock and receive all proceeds
Intermediary between Issuer and Public

Assumes Risk by buying and selling securities
Combined Offering
Proceeds divided between shareholders and issuers
Underwriter assumes principal capacity by purchasing entire issue and absorbs all unsold shares
Standby Agreement
After preemptive shareholders had a chance to purchase new issue ->

syndicate can purchase through standby offering, in return for a fee ->

firm commitment
Best Efforts
Underwriter agrees to agent but any unsold shares will be returned to issuer without penalty
All or None
All shares must be sold ->

If not -> issue is cancelled

Mini Maxi -> indicates certain percentage must be sold instead of All
Agreement Among Underwriters
details liabilities of syndicate members and the amount of compensation to be earned by syndicate members
Members of Investment Bankers with either

one syndicate manager


Underwriting Spread
Spread = Price Paid by Public - Revenue received by Issuer

Spread Includes

% manager's fee
% syndicate fee
% concession fee
Selling Group
Organized by manager to assist in distribution

Comprised of Broker/Dealers with no financial liability BUT earn concession

Responsibilites outlined in Selling Group Agreement
Divided/Western Account
Syndicate members are NOT responsible for unsold balance of assigned percentage
Undivided/Eastern Account
Syndicate members ARE responsible for unsold balance contingnet to specified percentage
Rule 2790
*New Issue Rule*

NASD firms should make bona-fide offering on all new issues to public

Notwithstanding internal interests, employee accounts or other restricted persons

Exemptions for Investment Companies and Variable Contracts
Preconditions for Sale
Prior to selling, firm must obtain representation or an AFFITMATIVE STATEMENT which positively declares eligibility

Can be done electronically, not orally

Reverification required every 12 months, with record retention of at least 3 years
Restricted Persons
Not permitted to purchase IPOs
NASD member firms; immediate family members
Finders and Fiduciaries
Portfolio Managers
Owners (<10%) of B/D
Exemptions of Restricted Persons
Investment Co. Act of 1940
Insurance Accounts
10% or less of ownership
Foreign Investment Companies
ERISA accounts
Undersubscribed Issues to B/D -> not to be sold to other restricted persons

Anti-Dilution Provision: allows previous shares(must be owned for at least one year) to purchase for retention of equity interest (not to be sold within three months)
Issuer-Directed Securities
Entities control or are controlled by issuer may purchase IPOs if directed by Issuer, including:

Parent Companies
Employees and Directors -> related persons and finders/fiduciaries
Green Shoe Clause
Oversubscribed issues may be bought additional to allocated share, up to 15%
Intervention of managing underwriter to bid at or below public offering price

Must be disclosed in prospectus

Must end when all new issues are sold

Only form of price manipulation allowed by SEC
Tender Offer
Entity offers to buy shares at a premium, normally for the purpose of acquiring control of company, cannot be bought on margin
Securities Act of 1933
Provide potential buyers with adequate information and to prevent fraud

Required to register with SEC

Prospectus includes NO APPROVAL CLAUSE -> indicates SEC review of adequacy and completeness of registration
Rule 147
Securities sold within state borders a.k.a Intrastate Offering Exemption

80% of gross revenues derived within state
80% of assets located within state
80% of proceeds used to expland facilities within state
100% of purchasers are principal state residents

May not be sold to Non-Residents until 9 months after effective date
Regulation A
New Issues valued at 5mill or less and sold over a 12 month period

must file an offering statement and offering circular
Regulation D
Exempts registration of Private Placements

issuer believes buyer is sophisticated

buyer has access to information equitable to prospectus

issuer assured buyer will not make quick sale -> Investment Letter

may not be sold to more than 35 nonaccredited investors
Rule 144
Restricted -> private placement:

must hold at least one year prior to disposal -> notice of sale to SEC (not required if less than 500 shares or less than $10,000) volume restrictions within second year

Control -> Insider
Holding Period for Restricted Stock
Year One - no resale

Year Two - Volume Restrictions

After Year Two - no restrictions for nonaffiliates
Rule 144A
Exemption for qualified institutions to buy restricted stock

Qualified Instituional Buyers -> at least 100 million intvested with nonaffiliated entity
Shelf Registration
Securites may be sold on a delayed or continued basis, registration allowable for reasonable amount to be expectedly sold within two years of registration date

allows issuing company and underwriters flexibility to sell when favorable
Rule 145
Defines reclassifications as sales subject to registration and prospectus requirements of SEC, including:

substitution of one security for another

merger or consolidation when securities are exchanged for another

transfer of assets from one corporation to another

requires from S-4