SERIES 24 GENERAL SECURITIES PRINCIPAL EXAM: SUPERVISORY & COMPLIANCE REVIEW COMPLETE QUESTIONS WITH CORRECT ANSWERS

SERIES 24 GENERAL SECURITIES PRINCIPAL EXAM: SUPERVISORY & COMPLIANCE REVIEW COMPLETE QUESTIONS WITH CORRECT ANSWERS .Form 144 must be filed with the SEC concurrently with the sale or earlier. within 10 days of the sale 5 days before the sale - ANSWERS-concurrently with the sale or earlier. Form 144, which alerts the SEC to the impending sale of unregistered or control stock, must be filed concurrently with or before the sale. The form must also be filed as amended if there is an inaccuracy or to indicate a change in broker. .For an additional issue offering where the subject security is quoted by the OTC Markets Group, the prospectus delivery requirement period is 90 days 60 days 40 days 25 days - ANSWERS-40 The prospectus delivery requirement periods in the aftermarket are as follows: for IPOs, 90 days if the security is non-Nasdaq and 25 days if the security is to be listed or quoted over Nasdaq. For additional issues, there is no requirement to deliver a prospectus in the secondary market if the security is listed NYSE or Nasdaq. Once the distribution is complete, there is no further obligation to deliver a prospectus. If the security is non-Nasdaq OTC, the prospectus delivery requirement period is 40 days. .A company's board of directors has authorized senior management to proceed with a public offering of senior debt securities. Following submission of the registration statement, which of the following documents must contain the legend "subject to completion or amendment"? red herring form 144 form t - ANSWERS-red herring The legend "subject to completion or amendment" must be printed in red on a preliminary prospectus (red herring). SEC Schedule 14A is filed to provide financial information and other important procedures for shareholders meetings .All of the following are requirements of a Rule 506(b) offering under Regulation D except the sale is limited to a total of 35 investors. the issue is not advertised to the general public. all nonaccredited investors are sophisticated - ANSWERS-the sale is limited to a total of 35 investors. In a Rule 506(b) offering, an issuer that is free of "bad actors" can sell to an unlimited number of accredited investors. However, there can be no more than 35 nonaccredited investors in any single offering. All investors must receive a copy of the offering memorandum, and all nonaccredited investors must be sophisticated. In addition, nonaccredited investors must be permitted to use a purchaser representative to help them evaluate the investment. Certain advertising, if limited in scope, is permitted. Advertising to the general public is strictly prohibited. Rule 506(c) prohibits nonaccredited investors. .A member firm, in return for letting a customer buy shares of a new issue at the public offering price, requests that the customer buy at least 500 additional shares in the secondary market within two weeks of the issuer's effective date. This action is permitted prohibited - ANSWERS-prohibited Tie-in arrangements are considered fraud under the Act of 1934 and are strictly prohibited. .Which of the advertising or sales promotion activities described below would be permitted in conjunction with a Rule 506(b) private placement Blanket mailing of a magazine reprint sent by a broker-dealer to all of the firm's customers that is highly favorable to the issuing corporation Announcement of a private placement and invitation to attend an investment information meeting sent to a select group of institutional investors - ANSWERS-Announcement of a private placement and invitation to attend an investment information meeting sent to a select group of institutional investors The SEC's rule centers on keeping private placements out of the general public's view. Any advertisement or promotion that solicits buying interest in private placement securities and can be freely seen or read by average investors violates SEC rules governing the terms under which these distributions are permitted. .Under SEC rules, all of the following would be considered accredited investors except an individual with annual income of $500,000 for the last two year with an expectation of continued earnings at that level. an officer of the issuer with annual income of $100,000. an individual with a personal net worth of $200,000. - ANSWERS-an individual with a personal net worth of $200,000. Under SEC rules, an accredited investor is an institution, an individual with annual income of $200,000 or more (with an expectation of continued earnings), an individual with a net worth of $1 million or more, exclusive of the net equity of their primary residence, or any officer or director of the issuer. In joint accounts, the income threshold is $300,000. .Under SEC Rule 10b-13, all of the following would be prohibited from tendering shares except an investor long call options an investor long stock. an investor short against the box. an investor short stock - ANSWERS-an investor long stock. To tender stock, a customer must be long the stock. Being long call options does not satisfy this requirement unless the customer has issued exercise instructions. If a customer is short against the box, the customer's net position is zero.