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29 Cards in this Set
- Front
- Back
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4 Investment Contract Requirements
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- Investment of money
- In common enterprise - Expectation of profit - Solely through efforts of others |
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3 Requirements for Security
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- Must Register
- Licesnsed to Sell - issuer of exemptions - Comply w/ anti-fraud & full and fair disclosures (never exemptions)3 |
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Family Resemblance Test
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Is Consumer transaction sec or not?
-does it resemble consumer transaction? - does it resemble an investment? - sprocedesd used for specific assets (loan)or gen finacing (sec) -repaymnt contigent on profits - # noted and payees - what do parties think |
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Risk Capital Test (HI, OR, CA)
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used by some states in place of Inv Contr
- Need an investment - risk capital of an enterprise (putting inv capital at risk) Golf Course example - Expectation of profit |
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Horizontal Common Enterprise (HCE)
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-similiar to Howey and Comp
-One promoter working with a pool of investors |
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Vertical Common Enterprise (VCE)
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Investors treated individually
- one promoter working directly with each investor |
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4 Factors for Family Resemblence Test
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- Proceeds used to buy specific assets vs. general finacing
- repayment contigent on profits - number of notes and payees - how characterized are??? |
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Statute passed by...
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Congress
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Regulation passed by...
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SEC
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3 Things to Worry about when selling securities
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- Regulation of securities
- Licensing - Enterprise |
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Whats an accredited investor?
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Net worth 1million (including spouse), AND annual income 200k/yr including spouse (2yr running)
- SEC assumes u are wise in fin matters |
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Whats an unaccredited investor?
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-must be sophisticated -> knowledge and exp in biz matters
- can have purchaser rep (fin plnnr) |
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Advertisement on web excpetion
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Website must have questionaire about personal wealth, est a r'shp, and given password
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Purpose of Reg D
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Provides exemption form registering with SEC
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Rule 504
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- Small offering exemption (not exceed 1mil)
- Offering can be made every 12 months - Cannot be blind pool or blind checks - unlimited # of accredited investors |
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4 Types of Syndication
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-Fully Specified: when u make offering
- Semi specified: multiple properties, but not all specified - Blind pool: no specific properties identified, just gen area - Blind Check: no idea what money will be used for |
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Rule 505 (Sec 3B)
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- 12 months not to exceed 5mill
- no more than 35 non-accreditted - no sophistication reqmnts - unlimited accredited investors - "Bad Boy" disqualification (only in rule 505) |
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5 Factors of Integration
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- Is there single plan of finacing
- Issuing same class of securites - Look at 6 months before and 6 after - State prop consideration - Offering for same gen purpose |
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Rule 44
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- If u do fall under Reg D u cant just sell in secondary market
-Allows you to sell stock after 2 yrs -because its private interest If u need to sell interest cant trade on secondary market |
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Safe Harbor Regulation
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If you qualify under 506 your automatically exempt from other regs
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Edwards case
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Payphone case- expanded #3 of the Howie test; expectation of profit
- gauranteed rate of return |
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Turner case
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"How to be great program"
Expanded #4 Managerial efforts of others |
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LP vs LLC
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LP is always a security
LLC is state dependent (Arizona Corp) |
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FINRA
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Financial Industry Regulatory agency
licesenes brokers |
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Reeves vs Ernst Young
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Established family resemblance test
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Rule 501
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Def of accredited investor
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NSMIA
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Natl Security Market Improvement Act
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Ralston Parina Case
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Court determined if a particular offering is private depnds on whether particular class of investor needs protection offered in
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Rule 147
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Intrastate
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