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125 Cards in this Set

  • Front
  • Back
An indication of interest is a sale. True or False?

How does stabilization work?
The managing underwriter agrees to purchase back any of the new shares at (or just below) the public offering price. When the shares are repurchased, it is as if the initial trade were annulled and it is re-offered to the public.
What is the one kind of ad that can be published during the Cooling Off Period?
Tombstone Ad.

What form of market manipulation by the syndicate manager is allowed by the SEC and why?

To peg the secondary market trading price of a new issue at the published public offering price.
The winner of a competitive bid on a new municipal issue is the firm that has the lowest ___ _____ ___.
net interest cost.
What is the Reallocation?
The portion of the spread a securities dealer, not part of the syndicate, earns when they purchase part of an issue to fill a customer order.
A prospectus is an abbreviated form of _________.
the registration statement.

What is another name for The Securities Act of 1933?
The Act of Full Disclosure

In order to engage in Stabilizing, the syndicate manager is required to post a descriptive phrase where?
The inside front cover of the prospectus.
What is a "Stand-By" Underwriting Commitment?
Where an underwriter stands by during a rights offering to existing shareholders, and then picks up the remaining shares to sell to the public.
What is the effective date?
The date sale of an issue is permitted.

Form 144 is not necessary if the sale does not exceed ___ shares and _____ in value.
500 shares, $10,000
What are the two things that the SEC will choose between at the end of the Cooling Off Period?
Either accept the offer or issue a "Letter of Deficiency".

What are 5 things a Bond Attorney does?
1. Establishes the eligibility of the exemption from federal income tax.
2. Determines there is proper authority for the bond issuance.
3. Identifies and monitors proper issuance proceedures.
4. Examines the physical bond certificates to ensure they are proper.
5. Issues the Written Legal Opinon once 1-4 are complete.
An effective registration of a security does not mean the SEC ________.
has approved the issue.

Under SEC rule 144 and 145, if a person is not an affiliate and the securities have been held for at least 2 years no _____ apply to resale.
How does a syndicate manager recoup the money lost through stabilizing.
He levy's a syndicate penalty bid against members whose clients turned shares in on a stablizing bid.
What are the characteristics of Syndicate (Group Net) Orders?
Orders made once the offering is underway at the public offering price. This purchase is credited to the syndicate members in proportion to their participation.
Unlike corporate securities, Municipal Securities are exempt from what?
The registration filing requirements of the Securities Act of 1933.
Rule 145 makes available the protection under the Securities Act of 1933 to purchasers of the following three types of securities.
1. Reclassification (other than stock split or reverse split)
2. Mergers or consolidations.
3. Transfers of assets.
Why is a Preliminary Prospectus called a Red Herring?
Because the front page is in Red Lettering.

The term agent is synonymous with _____.
What is the "Cooling Off Period"?
The span of time it takes the SEC to review the information in the registration statement.

If the company has publicly available information, current with the SEC, can restricted stock be sold without filing a registration statement?
What is the only thing related to a new issue that can be sent to prospective clients during the cooling off period?
The Red Herring.

SEC Rule 144 was created for what purpose?
So that certain resales of already existing securities can be made without filing a SEC Registration Statement.
What is the primary requirement of the Securities Act of 1933?
The corporation must file a registration statement (full disclosure) with the Securities and Exchange Commission.

Rule 504 of Regulation D allows what?
A company to raise up to $1,000,000 in any 12 month period without SEC Registration. And any number of Accredited or non-accredited investors may purchase a 504 issue.
During the Cooling Off Period, if a prospective client is interested in purchasing the issue, he will give the Invesment Banker a ______________.
Indication of Interest.

What is an Eastern Account?
Where each underwriter is responsible jointly and severably.
What are two important pieces of information missing from a Red Herring?
The Public Offering Price.

The Effective Date.

What percentage of a company's revenues, assets, and offering proceeds must be "in state" to qualify for SEC Rule 147?
During the Cooling Off Period, the investment banker can attempt to generate interest for an issue by distributing a Preliminary Prospectus, otherwise known as what?
A Red Herring.

The Official Statement is the equivalent of what?
a prospectus.
If there are no drop-outs in an Overallotment, what are the two potential outcomes?
The issuer will issue the additional shares, resulting in raising more money.

The syndicate members will have to go short, which they do in proportion to their participation.
Restricted securities that have been in a fully paid status for less than a year can be sold if what is done?
A notice of sale is filed with the SEC detailing the sale is in compliance with SEC Rule 144.
Towards the end of the Cooling Off Period, the Investment Banker and Issuer will have a meeting called a ______, and discuss what?
Due Dilligence Meeting.

Discuss any amendments that will be necessary to make the registration statement complete and accurate.

What is a non-affiliate?
An investor who is not a Control Person and has no other affiliation with the issuer.
What are two different methods municipal bond issuers find an underwriter?
1) Negotiated Underwriting.

2) Competitive bidding.
The sale of Control Stock differs from Restricted Stock in what one respect?
There is no holding period but it must be fully paid for.
A Prospectus will be delivered to a purchasor no later than ____________.
confirmation of his trade.

A Syndicate Letter is used in _______ _______ and is used in place of a ______ ____ _____.
Competitive Bidding.

Agreement Among Underwriters
How does a municipality announce the competitive bid to prospective bidders?
Notice of Sale.
Rule 505 of Regulation D allows what?
A corporation to raise up to $5,000,000 in any 12 month period without SEC Registration. Sales to non-accredited investors is limited to 35.
What is a Letter of Deficiency?
A letter sent to the issuer and underwriter explaining there is incomplete information in the registration statement.

What is a Principal?
One who acts as a dealer rather than as agent, and buys & sells for his own account and risk.
What is the Scale, and where is it usually found?
The listing of coupon rates, maturity dates, and yield or price the syndicate is reoffering the bonds to the public.

It is found in the center of the Tombstone Ad or on the front cover of the Official Statement.
If the sale of restricted stocks is done through a member firm in an agency capacity only it does not need to be registered with the SEC. True/False
What are the 7 securities that are exempt from the Act of '33?
1. Treasury and US. Agency Securities.
2. Municipal and State Offerings.
3. Intrastate Offerings (Rule 147).
4. Small Public Offerings (Regulation A).
5. Insurance Policies, including fixed annuity contracts.
6. Commercial Paper and Banker acceptances (9 month and shorter maturity).
7. Private Placements (Regulation D).
What are restricted securities?
Unregistered Securities purchased by an investor in a private placement.
The priority of filling municipal orders is what?
1. Presold.
2. Syndicate
3. Designated
4. Members.
According to SEC Rule 147, an intrastate offering can only be sold to out of state purchasers under what condition?
At least 9 months have elapsed since termination of the Rule 147 offering.
What is registration by Qualification?
Registration by qualification becomes effective when so ordered by the State Administrator. Most commonly used by those issuers who are unable to use notification or coordination.
What is the underwriting agreement?
The agreement that establishes the basic relationship between the issuer and the underwriters.
The portion of the spread retained by each underwriter is called the _______.
underwriting or syndicate allowance.
In order to sell more shares than the quantity limitations of SEC Rule 144 allow, the investor must do what?
File another Form 144 for another 90 days or file a SEC Registration Statement.
A person wishing to be guaranteed a purchase of Treasury Securities will do what?
Turn in a non-competitive bid.
"all or none" and "mini-max" are forms of ______________ underwriting.
Best efforts.
What is a positive and negative scale?
Positive is where the yield to maturity is lowest on near term maturities, and highest on the long term maturities. A Negative is the opposite.
How does the sale Quantity Limitations of SEC Rule 144 work?
An investor can sell the greater of 1% of the outstanding shares or the average weekly sales within the last 4 weeks prior to sale.
How does the Prudent Investor rule relate to Fiduciaries?
The Fiduciary in some states is restricted to investments that a prudent man would do, not in regard to speculation but in regard to a permanent distribution of funds.
What are the 4 types of municipal orders ?
1. Presale Orders.
2. Syndicate (group net) Orders.
3. Designated Orders.
4. Members Orders.
What is the syndicate manager's strategy in selling a municipal issue.
He gives priority to the sales that benefit the group before entertaining sales that benefit individual members.
Rule 505 of Regulation D allows what?
The dollar limit is waived and if sold to a non-accredited investor, investment sophistication tests must show that either the investor is sophisticated or they have a Purchaser Representative (who is accredited) who purchases the securities for them.
About a week before an auction the Treasury announces what four things?

Which two apply only to notes and bonds?
1. The amount the wish to borrow.
2. The maturity date of the issue.
3. The nominal or coupon rate anticipated.
4. The minimum denominations available.
What is an agent?
An agent buys or sells securities for the account and risk of someone else, charging a commission for the service rendered.
The remaining portion of the spread allocated to the selling group is called the ______ _____.
selling concession.
Commercial Paper and Banker Acceptances are exempt from SEC Registration if they have maturities of what?
Commercial Paper 270 days or less.

Banker Acceptances 180 days or less.
What are the 3 types of State (Blue Sky) Registration?
1. Notification or Filing.
2. Coordination.
3. Qualification.
The selling agreement provides for the purchase by the dealers from the underwriters at a _______ from the public price.
Another term for the underwriting discount is the ____.
What must a company do to be exempt from SEC Registration under Regulation A?
The value of the securities issued not exceed $5,000,000 in any 12 month period.
What is registration by Coordination?
This is when the issuer wishes to coordinate a federal registration with Blue Sky Registration in one or more states.
What are the characteristics of a presale order?
Orders made before the syndicate actually offers the bonds. These take priority over other orders.
What are the characteristics of Members Orders?
Purchases by members at the Take-Down price (Spread less the manager's fee).
Small Public Offerings are exempt from SEC registration through ________ ____.
Regulation A.
What is a Dutch Auction?
It is where a dealer bids for Treasury Securities on a Yeild Basis rather than price.
What does it mean to "Blue Sky" an issue?
When the syndicate manager registers the security in each state it will be issued.
All offerings of the US Treasury are sold __ _______.
at auction.
Rule 502 details two violations. What are they?
Aggregation: Sale of securities in violation of the dollar limitations.

Integration: Sale of securities to too large a number of non-accredited investors.
What is registration by Notification?
For an issuer who has been in operation for at least 3 years and has met certain profitability requirements in the past 3 years. The Administrator declares the state registrations concurrent with the federal registration. Most but not all states allow this form of registration.
The SEC requires the underwriter set up an ______ ____ at a ____ for proceeds on a best effort issue.
escrow account.

What is Retention Percentage?
The percentage of each syndicate member's allotment that he will actually have available for sale.
What type of life insurance and annuities are not exempt from SEC Registration?
What is a legal list in relation to a Fiduciary?
It is a list published by banking authorities in some states of securities considered to be appropriate for a Fiduciary to purchase.
A dealer agreement is also known as what?
A seller agreement.
The only persons allowed at an auction of US Government Securities are __________.
Primary Dealers.
Intrastat Offerings must comply with the proviisons of _____ to retain their SEC registration exemption.
SEC Rule 147
What is the percentage of the allotment that is not the member's retainage used for?
The syndicate manager uses them for group net and designated orders.
What is a control person?
A corporate director, officer, greater than 10% voting stockholder, or the spouse of one of these.
Who appoints Primary Dealers and currently how many are there?
The President of the Federal Reserve Bank of New York.

There are currently 25.
What is a Shelf Registration?
An issuer may register any amount of securities that, at the time the registration statement becomes effective, is reasonably expected to be offered and sold in 2 years.
What are the characteristics of Designated Orders?
Sales to investors at the public offering price where the investor designates which member(s) will receive credit for the sales.
What is a dealer agreement?
The agreement where securities dealers, not acting as underwriters, agree to purchase from the syndicate the securities that are the subject of the public offering.
The portion of the spread paid to the managing underwriter is called what?
Manager's Fee.
Instead of a registration statement, what does a company file under Regulation A?
An Offering Statement. Which is a simplified disclosure statement.
The price the managing underwriter pays for the offering is called the ______.
underwriting discount.
The bond attorney does/does not issue the Official Statement.
does not
What does the Treasury offer every week on Mondays?
13 and 26 week Treasury Bills.
SEC Rule 144A says Qualified Institutional Buyers (QIB's) can sell to other QIB's without the usual ____ ___ holding period.
2 year
When preliminary discussions on an issue are completed and the syndicate manager has decided to participate in the offering the issuer and syndicate manager sign what?
a letter of intent.
All sales of control stock must be accompanied by what?
A rule 144 filing.
A syndicate is headed by ____.
a syndicate manager. Also known as the "Managing Underwriter".
Under Rule 501 of Reg D, Accredited Investors are ....
in the business of investing money for other people as fiduciaries, have access to the highest level of expertise, or are financially strong enough to invest in unregistered issues.
What is the 90 day rule?
On an IPO, all members of an underwriting group make available a prospectus for a period of 90 days after the effective date.

The underwriters usually sign an underwriting agreement Severally, but not jointly. What does this mean?
Each underwriter is obligated to sell their own allotment but bears no financial obligation for any unsold allotment of another underwriter.
There are three principal underwriting contracts involved in the usual public offering. What are they?
1. The Agreement Among Underwriters.
2. Underwriting Agreement.
3. Dealer Agreement.
Who is a statutory underwriter?
Someone who violates the Securities Act of '33.
What is the 40 day rule?
On a new issue that is not an IPO, any members of the underwriting group must make available a prospectus for 40 days after the effective date.

What is a "Divided" or "Western" account?
One where the underwriters sign jointly but not severably.
What is an Underwriting Syndicate?
A group of underwriters or investment bankers formed to spread the risk of an offering.
Although Municipal Bond offernings are exempt from SEC registration, a _____ ____ document called a _____ _____ is required to be provided to purchasers.
full disclosure;

Official Statement
The most popular use of a Tombstone Ad is for what?
To announce the effectiveness of a new issue.
What is control stock?
Stock owned by a control person.
What is stickering?
A method of updating a prospectus by placing a new page over the old one.

An investor can sell one or more times within _____ days as long as the overall Quantity Limitations of SEC Rule 144 are not exceeded.
A Tombstone Ad is required to include a statement saying what?
The securities may only be sold by use of the prospectus.
How does an Eastern Account work?
Each underwriter is responsible for unsold allotments of others based on his proportionate share of the offering.
In lieu of registering the securities with the SEC, what does the municipality use to ensure their issue complies with local, state, and federal laws?
A Bond Attorney.
Restricted securities that have been in fully paid status for over a year can be sold without filing a SEC registration statement. True/False
Any prospectus in use more than 9 months may not have any financial information more than ____ old.
16 months.

What is the Public Offering Price?
The price at which the securities are offered to the general public and is printed on the front page of the prospectus.
A bond attorney is also known as ____ ____ ___.
independent bond counsel
Rule 503 of Reg D states what?
An issuer must file Form D within 15 days of the offering or be in violation.
What Regulation details how a company qualifies for exemption from SEC Registration under Private Placements?
Regulation D