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31 Cards in this Set
- Front
- Back
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Security Registration Process
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Registration Statement = Filing Date ->
Cooling Period = 20 Days = Red Herring -> Deficiency Letter OR Allowance -> Prospectus |
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Registered Secondary Offering
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Shareholders sell stock and receive all proceeds
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Underwriter
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Intermediary between Issuer and Public
Assumes Risk by buying and selling securities |
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Combined Offering
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Proceeds divided between shareholders and issuers
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Firm-Commitment
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Underwriter assumes principal capacity by purchasing entire issue and absorbs all unsold shares
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Standby Agreement
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After preemptive shareholders had a chance to purchase new issue ->
syndicate can purchase through standby offering, in return for a fee -> firm commitment |
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Best Efforts
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Underwriter agrees to agent but any unsold shares will be returned to issuer without penalty
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All or None
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All shares must be sold ->
If not -> issue is cancelled Mini Maxi -> indicates certain percentage must be sold instead of All |
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Agreement Among Underwriters
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details liabilities of syndicate members and the amount of compensation to be earned by syndicate members
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Syndicate
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Members of Investment Bankers with either
one syndicate manager OR comanagers |
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Underwriting Spread
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Spread = Price Paid by Public - Revenue received by Issuer
Spread Includes % manager's fee % syndicate fee % concession fee |
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Selling Group
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Organized by manager to assist in distribution
Comprised of Broker/Dealers with no financial liability BUT earn concession Responsibilites outlined in Selling Group Agreement |
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Divided/Western Account
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Syndicate members are NOT responsible for unsold balance of assigned percentage
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Undivided/Eastern Account
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Syndicate members ARE responsible for unsold balance contingnet to specified percentage
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Rule 2790
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*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 |
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Preconditions for Sale
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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 |
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Restricted Persons
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Not permitted to purchase IPOs
Including: NASD member firms; immediate family members Finders and Fiduciaries Portfolio Managers Owners (<10%) of B/D |
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Exemptions of Restricted Persons
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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) |
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Issuer-Directed Securities
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Entities control or are controlled by issuer may purchase IPOs if directed by Issuer, including:
Parent Companies Subsidiaries Employees and Directors -> related persons and finders/fiduciaries |
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Green Shoe Clause
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Oversubscribed issues may be bought additional to allocated share, up to 15%
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Stabilization
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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 |
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Tender Offer
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Entity offers to buy shares at a premium, normally for the purpose of acquiring control of company, cannot be bought on margin
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Securities Act of 1933
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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 |
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Rule 147
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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 |
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Regulation A
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New Issues valued at 5mill or less and sold over a 12 month period
must file an offering statement and offering circular |
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Regulation D
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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 |
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Rule 144
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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 |
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Holding Period for Restricted Stock
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Year One - no resale
Year Two - Volume Restrictions After Year Two - no restrictions for nonaffiliates |
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Rule 144A
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Exemption for qualified institutions to buy restricted stock
Qualified Instituional Buyers -> at least 100 million intvested with nonaffiliated entity |
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Shelf Registration
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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 |
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Rule 145
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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 |
