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Question 1 of 10
1. Question
Regarding Fairness Opinions: Disclosures, which of the following statement(s) is/are untrue?
Correct
5150. Fairness Opinions
Disclosures
If at the time a fairness opinion is issued to the board of directors of a company the member issuing the fairness opinion knows or has reason to know that the fairness opinion will be provided or described to the company’s public shareholders, the member must disclose in the fairness opinion:
(1) if the member has acted as a financial advisor to any party to the transaction that is the subject of the fairness opinion, and, if applicable, that it will receive compensation that is contingent upon the successful completion of the transaction, for rendering the fairness opinion and/or serving as an advisor;
(2) if the member will receive any other significant payment or compensation contingent upon the successful completion of the transaction;
(3) any material relationships that existed during the past two years or that are mutually understood to be contemplated in which any compensation was received or is intended to be received as a result of the relationship between the member and any party to the transaction that is the subject of the fairness opinion;
(4) if any information that formed a substantial basis for the fairness opinion that was supplied to the member by the company requesting the opinion concerning the companies that are parties to the transaction has been independently verified by the member, and if so, a description of the information or categories of information that were verified;Incorrect
5150. Fairness Opinions
Disclosures
If at the time a fairness opinion is issued to the board of directors of a company the member issuing the fairness opinion knows or has reason to know that the fairness opinion will be provided or described to the company’s public shareholders, the member must disclose in the fairness opinion:
(1) if the member has acted as a financial advisor to any party to the transaction that is the subject of the fairness opinion, and, if applicable, that it will receive compensation that is contingent upon the successful completion of the transaction, for rendering the fairness opinion and/or serving as an advisor;
(2) if the member will receive any other significant payment or compensation contingent upon the successful completion of the transaction;
(3) any material relationships that existed during the past two years or that are mutually understood to be contemplated in which any compensation was received or is intended to be received as a result of the relationship between the member and any party to the transaction that is the subject of the fairness opinion;
(4) if any information that formed a substantial basis for the fairness opinion that was supplied to the member by the company requesting the opinion concerning the companies that are parties to the transaction has been independently verified by the member, and if so, a description of the information or categories of information that were verified; -
Question 2 of 10
2. Question
Regarding Fairness Opinions: Disclosures, which of the following statement(s) is/are true?
Correct
5150. Fairness Opinions
Disclosures
If at the time a fairness opinion is issued to the board of directors of a company the member issuing the fairness opinion knows or has reason to know that the fairness opinion will be provided or described to the company’s public shareholders.Incorrect
5150. Fairness Opinions
Disclosures
If at the time a fairness opinion is issued to the board of directors of a company the member issuing the fairness opinion knows or has reason to know that the fairness opinion will be provided or described to the company’s public shareholders. -
Question 3 of 10
3. Question
Which of the following statement(s) about Fairness Opinions: Procedures is/are true?
Correct
5150. Fairness Opinions
Procedures
Any member issuing a fairness opinion must have written procedures for approval of a fairness opinion by the member.Incorrect
5150. Fairness Opinions
Procedures
Any member issuing a fairness opinion must have written procedures for approval of a fairness opinion by the member. -
Question 4 of 10
4. Question
Regarding Fairness Opinions: Procedures, which of the following statement(s) is/are true?
Correct
5150. Fairness Opinions
Procedures
Any member issuing a fairness opinion must have written procedures for approval of a fairness opinion by the member, including:
(1) the types of transactions and the circumstances in which the member will use a fairness committee to approve or issue a fairness opinion,
(2) the process to determine whether the valuation analyses used in the fairness opinion are appropriate.Incorrect
5150. Fairness Opinions
Procedures
Any member issuing a fairness opinion must have written procedures for approval of a fairness opinion by the member, including:
(1) the types of transactions and the circumstances in which the member will use a fairness committee to approve or issue a fairness opinion,
(2) the process to determine whether the valuation analyses used in the fairness opinion are appropriate. -
Question 5 of 10
5. Question
Which of the following statement(s) is/are untrue while the types of transactions and the circumstances in which the member will use a fairness committee to approve or issue a fairness opinion, and in those transactions in which it uses a fairness committee?
Correct
5150. Fairness Opinions
Procedures
Any member issuing a fairness opinion must have written procedures for approval of a fairness opinion by the member: the types of transactions and the circumstances in which the member will use a fairness committee to approve or issue a fairness opinion, and in those transactions in which it uses a fairness committee:
(A) the process for selecting personnel to be on the fairness committee;
(B) the necessary qualifications of persons serving on the fairness committee;
(C) the process to promote a balanced review by the fairness committee, which shall include the review and approval by persons who do not serve on the deal team to the transaction;Incorrect
5150. Fairness Opinions
Procedures
Any member issuing a fairness opinion must have written procedures for approval of a fairness opinion by the member: the types of transactions and the circumstances in which the member will use a fairness committee to approve or issue a fairness opinion, and in those transactions in which it uses a fairness committee:
(A) the process for selecting personnel to be on the fairness committee;
(B) the necessary qualifications of persons serving on the fairness committee;
(C) the process to promote a balanced review by the fairness committee, which shall include the review and approval by persons who do not serve on the deal team to the transaction; -
Question 6 of 10
6. Question
Regarding Participation in Rollups, which one of the following is/are correct?
Correct
2310. Direct Participation Programs
Participation in Rollups: to receive or retain a security with substantially the same terms and conditions as the security originally held. Securities received or retained will be considered to have the same terms and conditions as the security originally held if:
1. there is no material adverse change to dissenting limited partners’ rights with respect to the business plan or the investment, distribution and liquidation policies of the limited partnership; and
2. the dissenting limited partners receive substantially the same rights, preferences and priorities as they had pursuant to the security originally held;Incorrect
2310. Direct Participation Programs
Participation in Rollups: to receive or retain a security with substantially the same terms and conditions as the security originally held. Securities received or retained will be considered to have the same terms and conditions as the security originally held if:
1. there is no material adverse change to dissenting limited partners’ rights with respect to the business plan or the investment, distribution and liquidation policies of the limited partnership; and
2. the dissenting limited partners receive substantially the same rights, preferences and priorities as they had pursuant to the security originally held; -
Question 7 of 10
7. Question
Regarding fees of general partners, which of the following statement(s) is/are true?
Correct
2310. Direct Participation Programs
Participation in Rollups: Regardless of whether a limited partnership rollup transaction is in compliance with subparagraph (C)(i), a limited partnership rollup transaction will be presumed to be unfair and unreasonable: as to fees of general partners, if:
1. general partners are not prevented from receiving both unearned management fees discounted to a present value (if such fees were not previously provided for in the limited partnership agreement and disclosed to limited partners) and new asset-based fees;
2. property management fees and other general partner fees are inappropriate, unreasonable and more than, or not competitive with, what would be paid to third parties for performing similar services; or
3. changes in fees which are substantial and adverse to limited partners are not approved by an independent committee according to the facts and circumstances of each transaction.Incorrect
2310. Direct Participation Programs
Participation in Rollups: Regardless of whether a limited partnership rollup transaction is in compliance with subparagraph (C)(i), a limited partnership rollup transaction will be presumed to be unfair and unreasonable: as to fees of general partners, if:
1. general partners are not prevented from receiving both unearned management fees discounted to a present value (if such fees were not previously provided for in the limited partnership agreement and disclosed to limited partners) and new asset-based fees;
2. property management fees and other general partner fees are inappropriate, unreasonable and more than, or not competitive with, what would be paid to third parties for performing similar services; or
3. changes in fees which are substantial and adverse to limited partners are not approved by an independent committee according to the facts and circumstances of each transaction. -
Question 8 of 10
8. Question
Regarding Beneficial Owners, which of the following statement(s) is/are true?
Correct
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Preconditions for Sale: Beneficial Owners
the account holder(s), or a person authorized to represent the beneficial owners of the account, that the account is eligible to purchase new issues in compliance with this Rule;Incorrect
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Preconditions for Sale: Beneficial Owners
the account holder(s), or a person authorized to represent the beneficial owners of the account, that the account is eligible to purchase new issues in compliance with this Rule; -
Question 9 of 10
9. Question
Regarding Anti-Dilution Provisions, which of the following statement(s) is/are true?
Correct
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Anti-Dilution Provisions
The prohibitions on the purchase and sale of new issues in this Rule shall not apply to an account in which a restricted person has a beneficial interest that meets the following conditions:
(1) the account has held an equity ownership interest in the issuer, or a company that has been acquired by the issuer in the past year, for a period of one year prior to the effective date of the offering;
(2) the sale of the new issue to the account shall not increase the account’s percentage equity ownership in the issuer above the ownership level as of three months prior to the filing of the registration statement in connection with the offering;
(3) the sale of the new issue to the account shall not include any special terms; and
(4) the new issue purchased pursuant to this paragraph (e) shall not be sold, transferred, assigned, pledged or hypothecated for a period of three months following the effective date of the offering.Incorrect
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Anti-Dilution Provisions
The prohibitions on the purchase and sale of new issues in this Rule shall not apply to an account in which a restricted person has a beneficial interest that meets the following conditions:
(1) the account has held an equity ownership interest in the issuer, or a company that has been acquired by the issuer in the past year, for a period of one year prior to the effective date of the offering;
(2) the sale of the new issue to the account shall not increase the account’s percentage equity ownership in the issuer above the ownership level as of three months prior to the filing of the registration statement in connection with the offering;
(3) the sale of the new issue to the account shall not include any special terms; and
(4) the new issue purchased pursuant to this paragraph (e) shall not be sold, transferred, assigned, pledged or hypothecated for a period of three months following the effective date of the offering. -
Question 10 of 10
10. Question
Regarding Persons Owning a Broker-Dealer, which of the following statement(s) is/are true?
Correct
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Persons Owning a Broker-Dealer
Any person that directly or indirectly owns 25% or more of a public reporting company listed, or required to be listed, in Schedule B of a Form BD (other than a reporting company that is listed on a national securities exchange or other than with respect to a limited business broker-dealer);Incorrect
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Persons Owning a Broker-Dealer
Any person that directly or indirectly owns 25% or more of a public reporting company listed, or required to be listed, in Schedule B of a Form BD (other than a reporting company that is listed on a national securities exchange or other than with respect to a limited business broker-dealer);