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Question 1 of 10
1. Question
Regarding Broker-Dealer Personnel, which of the following statement(s) is/are untrue?
Correct
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Broker-Dealer Personnel
(i) Any officer, director, general partner, associated person or employee of a member or any other broker-dealer (other than a limited business broker-dealer);
(ii) Any agent of a member or any other broker-dealer (other than a limited business broker-dealer) that is engaged in the investment banking or securities business; or
(iii) An immediate family member of a person specified in subparagraph (B)(i) or (ii) if the person specified in subparagraph (B)(i) or (ii):
a. materially supports, or receives material support from, the immediate family member;
b. is employed by or associated with the member, or an affiliate of the member, selling the new issue to the immediate family member; or
c. has an ability to control the allocation of the new issue.Incorrect
5130. Restrictions on the Purchase and Sale of Initial Equity Public Offerings
Broker-Dealer Personnel
(i) Any officer, director, general partner, associated person or employee of a member or any other broker-dealer (other than a limited business broker-dealer);
(ii) Any agent of a member or any other broker-dealer (other than a limited business broker-dealer) that is engaged in the investment banking or securities business; or
(iii) An immediate family member of a person specified in subparagraph (B)(i) or (ii) if the person specified in subparagraph (B)(i) or (ii):
a. materially supports, or receives material support from, the immediate family member;
b. is employed by or associated with the member, or an affiliate of the member, selling the new issue to the immediate family member; or
c. has an ability to control the allocation of the new issue. -
Question 2 of 10
2. 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
(i) Any person listed, or required to be listed, in Schedule A of a Form BD (other than with respect to a limited business broker-dealer), except persons identified by an ownership code of less than 10%;
(ii) Any person listed, or required to be listed, in Schedule B of a Form BD (other than with respect to a limited business broker-dealer), except persons whose listing on Schedule B relates to an ownership interest in a person listed on Schedule A identified by an ownership code of less than 10%;
(iii) Any person listed, or required to be listed, in Schedule C of a Form BD that meets the criteria of subparagraphs (E)(i) and (E)(ii) above;
(iv) Any person that directly or indirectly owns 10% or more of a public reporting company listed, or required to be listed, in Schedule A 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
(i) Any person listed, or required to be listed, in Schedule A of a Form BD (other than with respect to a limited business broker-dealer), except persons identified by an ownership code of less than 10%;
(ii) Any person listed, or required to be listed, in Schedule B of a Form BD (other than with respect to a limited business broker-dealer), except persons whose listing on Schedule B relates to an ownership interest in a person listed on Schedule A identified by an ownership code of less than 10%;
(iii) Any person listed, or required to be listed, in Schedule C of a Form BD that meets the criteria of subparagraphs (E)(i) and (E)(ii) above;
(iv) Any person that directly or indirectly owns 10% or more of a public reporting company listed, or required to be listed, in Schedule A 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); -
Question 3 of 10
3. 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); -
Question 4 of 10
4. Question
Regarding New Issue Pricing and Trading PracticesLock-Up Agreements, for Lock-Up Agreements, how many business days are required?
Correct
5131. New Issue Allocations and Distributions
New Issue Pricing and Trading PracticesLock-Up Agreements.
Any lock-up agreement or other restriction on the transfer of the issuer’s shares by officers and directors of the issuer entered into in connection with a new issue shall provide that: At least two business days before the release or waiver of any lock-up or other restriction on the transfer of the issuer’s shares, the book-running lead manager will notify the issuer of the impending release or waiver and announce the impending release or waiver through a major news service, except where the release or waiver is effected solely to permit a transfer of securities that is not for consideration and where the transferee has agreed in writing to be bound by the same lock-up agreement terms in place for the transferor;Incorrect
5131. New Issue Allocations and Distributions
New Issue Pricing and Trading PracticesLock-Up Agreements.
Any lock-up agreement or other restriction on the transfer of the issuer’s shares by officers and directors of the issuer entered into in connection with a new issue shall provide that: At least two business days before the release or waiver of any lock-up or other restriction on the transfer of the issuer’s shares, the book-running lead manager will notify the issuer of the impending release or waiver and announce the impending release or waiver through a major news service, except where the release or waiver is effected solely to permit a transfer of securities that is not for consideration and where the transferee has agreed in writing to be bound by the same lock-up agreement terms in place for the transferor; -
Question 5 of 10
5. Question
Regarding New Issue Allocations and Distributions, which of the following definition(s) is/are untrue?
Correct
5131. New Issue Allocations and Distributions
Definitions
For purposes of this Rule, the following terms shall have the meanings stated below.
(1) A “public company” is any company that is registered under Section 12 of the Exchange Act or files periodic reports pursuant to Section 15(d) thereof.
(2) “Beneficial interest” shall have the same meaning as in FINRA Rule 5130(i)(1).
(3) “Material support” means directly or indirectly providing more than 25% of a person’s income in the prior calendar year. Persons living in the same household are deemed to be providing each other with material support.
(4) “Flipped” means the initial sale of new issue shares purchased in an offering within 30 days following the offering date of such offering.Incorrect
5131. New Issue Allocations and Distributions
Definitions
For purposes of this Rule, the following terms shall have the meanings stated below.
(1) A “public company” is any company that is registered under Section 12 of the Exchange Act or files periodic reports pursuant to Section 15(d) thereof.
(2) “Beneficial interest” shall have the same meaning as in FINRA Rule 5130(i)(1).
(3) “Material support” means directly or indirectly providing more than 25% of a person’s income in the prior calendar year. Persons living in the same household are deemed to be providing each other with material support.
(4) “Flipped” means the initial sale of new issue shares purchased in an offering within 30 days following the offering date of such offering. -
Question 6 of 10
6. Question
Regarding Covered non-public company, what should be income in the last fiscal year?
Correct
5131. New Issue Allocations and Distributions
“Covered non-public company” means any non-public company satisfying the following criteria: (i) income of at least $1 million in the last fiscal year or in two of the last three fiscal years and shareholders’ equity of at least $15 million; (ii) shareholders’ equity of at least $30 million and a two-year operating history; or (iii) total assets and total revenue of at least $75 million in the latest fiscal year or in two of the last three fiscal years.Incorrect
5131. New Issue Allocations and Distributions
“Covered non-public company” means any non-public company satisfying the following criteria: (i) income of at least $1 million in the last fiscal year or in two of the last three fiscal years and shareholders’ equity of at least $15 million; (ii) shareholders’ equity of at least $30 million and a two-year operating history; or (iii) total assets and total revenue of at least $75 million in the latest fiscal year or in two of the last three fiscal years. -
Question 7 of 10
7. Question
Regarding Sale of Securities in a Fixed Price Offering, which of the following statement(s) is/are true?
Correct
5141. Sale of Securities in a Fixed Price Offering
No member or person associated with a member that participates in a selling syndicate or selling group or that acts as the single underwriter in connection with a fixed price offering shall offer or grant, directly or indirectly, to any person or account that is not a member of the selling syndicate or selling group or that is a person or account other than the single underwriter any securities in the offering at a price below the stated public offering price (“reduced price”). Subject to the requirements of Rule 5130, a member of a selling syndicate or selling group, or a member that acts as the single underwriter, is permitted to sell securities in the offering to an affiliated person, provided such member does not sell the securities to the affiliated person at a reduced price under this Rule. The requirements of this Rule shall apply until the termination of the offering or until a member, having made a bona fide public offering of the securities, is unable to continue selling such securities at the stated public offering price. For purposes of this Rule, securities in a fixed price offering shall be presumed salable if the securities immediately trade in the secondary market at a price or prices which are above the stated public offering price.Incorrect
5141. Sale of Securities in a Fixed Price Offering
No member or person associated with a member that participates in a selling syndicate or selling group or that acts as the single underwriter in connection with a fixed price offering shall offer or grant, directly or indirectly, to any person or account that is not a member of the selling syndicate or selling group or that is a person or account other than the single underwriter any securities in the offering at a price below the stated public offering price (“reduced price”). Subject to the requirements of Rule 5130, a member of a selling syndicate or selling group, or a member that acts as the single underwriter, is permitted to sell securities in the offering to an affiliated person, provided such member does not sell the securities to the affiliated person at a reduced price under this Rule. The requirements of this Rule shall apply until the termination of the offering or until a member, having made a bona fide public offering of the securities, is unable to continue selling such securities at the stated public offering price. For purposes of this Rule, securities in a fixed price offering shall be presumed salable if the securities immediately trade in the secondary market at a price or prices which are above the stated public offering price. -
Question 8 of 10
8. Question
Regarding Notification Requirements for Offering Participants, which of the following statement(s) is/are true?
Correct
5190. Notification Requirements for Offering Participants
Notice Relating to Distributions of Securities Subject to a Restricted Period Under SEC Regulation M
The member’s determination as to whether a one-day or five-day restricted period applies under Rule 101 of SEC Regulation M and the basis for such determination, including the contemplated date and time of the commencement of the restricted period, the security name and symbol, and identification of the distribution participants and affiliated purchasers, no later than the business day prior to the first complete trading session of the applicable restricted period, unless later notification is necessary under specific circumstances;Incorrect
5190. Notification Requirements for Offering Participants
Notice Relating to Distributions of Securities Subject to a Restricted Period Under SEC Regulation M
The member’s determination as to whether a one-day or five-day restricted period applies under Rule 101 of SEC Regulation M and the basis for such determination, including the contemplated date and time of the commencement of the restricted period, the security name and symbol, and identification of the distribution participants and affiliated purchasers, no later than the business day prior to the first complete trading session of the applicable restricted period, unless later notification is necessary under specific circumstances; -
Question 9 of 10
9. Question
Regarding Transactions Related to Initial Public Offerings, which of the following statement(s) is/are true?
Correct
6130. Transactions Related to Initial Public Offerings
No member or person associated with a member shall execute or cause to be executed, directly or indirectly, a transaction otherwise than on an exchange in a security subject to an initial public offering until such security has first opened for trading on the national securities exchange listing the security, as indicated by the dissemination of an opening transaction in the security by the listing exchange.Incorrect
6130. Transactions Related to Initial Public Offerings
No member or person associated with a member shall execute or cause to be executed, directly or indirectly, a transaction otherwise than on an exchange in a security subject to an initial public offering until such security has first opened for trading on the national securities exchange listing the security, as indicated by the dissemination of an opening transaction in the security by the listing exchange. -
Question 10 of 10
10. Question
Regarding Definitions, which of the following statement(s) is/are incorrect?
Correct
6220. Definitions
(1) “Exchange Act” or “SEA” means the Securities Exchange Act of 1934.
(2) “ADF-eligible security” means an NMS stock as defined in Rule 600(b)(47) of SEC Regulation NMS.
(3) “ADF Market Participant” or “Market Participant” means a Registered Reporting ADF Market Maker, or a Registered Reporting ADF ECN.
(4) “ADF Trading Center” means a Registered Reporting ADF Market Maker, or a Registered Reporting ADF ECN that is a “Trading Center,” as defined in Rule 600(b)(78) of SEC Regulation NMS, and that is certified, pursuant to Rule 6250, to display its quotations or orders through the ADF.
(5) “Certification Record” means the document that an ADF Trading Center must execute and continue to comply with, pursuant to Rule 6250, to display its quotations through the ADF.Incorrect
6220. Definitions
(1) “Exchange Act” or “SEA” means the Securities Exchange Act of 1934.
(2) “ADF-eligible security” means an NMS stock as defined in Rule 600(b)(47) of SEC Regulation NMS.
(3) “ADF Market Participant” or “Market Participant” means a Registered Reporting ADF Market Maker, or a Registered Reporting ADF ECN.
(4) “ADF Trading Center” means a Registered Reporting ADF Market Maker, or a Registered Reporting ADF ECN that is a “Trading Center,” as defined in Rule 600(b)(78) of SEC Regulation NMS, and that is certified, pursuant to Rule 6250, to display its quotations or orders through the ADF.
(5) “Certification Record” means the document that an ADF Trading Center must execute and continue to comply with, pursuant to Rule 6250, to display its quotations through the ADF.