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Question 1 of 10
1. Question
Which of the following statement(s) about Direct Participation Programs is/are true about the meaning of Solicitation expenses?
Correct
2310. Direct Participation Programs
Definitions
Solicitation expenses — direct marketing expenses incurred by a member, in connection with a limited partnership rollup transaction such as telephone calls, broker-dealer fact sheets, members’ legal and other fees related to the solicitation, as well as direct solicitation compensation to members.Incorrect
2310. Direct Participation Programs
Definitions
Solicitation expenses — direct marketing expenses incurred by a member, in connection with a limited partnership rollup transaction such as telephone calls, broker-dealer fact sheets, members’ legal and other fees related to the solicitation, as well as direct solicitation compensation to members. -
Question 2 of 10
2. Question
Regarding Requirements, which of the following statement(s) is/are true?
Correct
2310. Direct Participation Programs
Requirements: Application
No member or person associated with a member shall participate in a public offering of a direct participation program, a limited partnership rollup transaction or, where expressly provided below, a real estate investment trust as defined in Rule 2231(d)(4)(“REIT”), except in accordance with this paragraph (b).Incorrect
2310. Direct Participation Programs
Requirements: Application
No member or person associated with a member shall participate in a public offering of a direct participation program, a limited partnership rollup transaction or, where expressly provided below, a real estate investment trust as defined in Rule 2231(d)(4)(“REIT”), except in accordance with this paragraph (b). -
Question 3 of 10
3. Question
Which of the following statement(s) regarding Requirements: Suitability is/are true?
Correct
2310. Direct Participation Programs
Requirements: Suitability
In recommending to a participant the purchase, sale or exchange of an interest in a direct participation program, a member or person associated with a member shall have reasonable grounds to believe, on the basis of information obtained from the participant concerning his investment objectives, other investments, financial situation and needs, and any other information known by the member or associated personIncorrect
2310. Direct Participation Programs
Requirements: Suitability
In recommending to a participant the purchase, sale or exchange of an interest in a direct participation program, a member or person associated with a member shall have reasonable grounds to believe, on the basis of information obtained from the participant concerning his investment objectives, other investments, financial situation and needs, and any other information known by the member or associated person -
Question 4 of 10
4. Question
Regarding Requirements: Suitability, which of the following statement(s) is/are true?
Correct
2310. Direct Participation Programs
Requirements: Suitability
n recommending to a participant the purchase, sale or exchange of an interest in a direct participation program, a member or person associated with a member shall maintain in the files of the member documents disclosing the basis upon which the determination of suitability was reached as to each participant.Incorrect
2310. Direct Participation Programs
Requirements: Suitability
n recommending to a participant the purchase, sale or exchange of an interest in a direct participation program, a member or person associated with a member shall maintain in the files of the member documents disclosing the basis upon which the determination of suitability was reached as to each participant. -
Question 5 of 10
5. Question
Which of the following statement(s) can be the best answer regarding disclosure?
Correct
2310. Direct Participation Programs
Disclosure:
Prior to participating in a public offering of a direct participation program or REIT, a member or person associated with a member shall have reasonable grounds to believe, based on information made available to him by the sponsor through a prospectus or other materials, that all material facts are adequately and accurately disclosed and provide a basis for evaluating the program.Incorrect
2310. Direct Participation Programs
Disclosure:
Prior to participating in a public offering of a direct participation program or REIT, a member or person associated with a member shall have reasonable grounds to believe, based on information made available to him by the sponsor through a prospectus or other materials, that all material facts are adequately and accurately disclosed and provide a basis for evaluating the program. -
Question 6 of 10
6. Question
Regarding Disclosure, which of the following statement(s) is/are untrue while determining the adequacy of disclosed facts pursuant to subparagraph (A) hereof, a member or person associated with a member shall obtain information on material facts relating at a minimum?
Correct
2310. Direct Participation Programs
Disclosure:
In determining the adequacy of disclosed facts pursuant to subparagraph (A) hereof, a member or person associated with a member shall obtain information on material facts relating at a minimum to the following, if relevant in view of the nature of the program:
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program’s conflict and risk factors; and
(vi) appraisals and other pertinent reports.Incorrect
2310. Direct Participation Programs
Disclosure:
In determining the adequacy of disclosed facts pursuant to subparagraph (A) hereof, a member or person associated with a member shall obtain information on material facts relating at a minimum to the following, if relevant in view of the nature of the program:
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program’s conflict and risk factors; and
(vi) appraisals and other pertinent reports. -
Question 7 of 10
7. Question
Which of the following statement(s) is/are untrue when a member or person associated with a member may rely upon the results of an inquiry conducted by another member or members?
Correct
2310. Direct Participation Programs
Disclosure:
For purposes of subparagraphs (A) or (B) hereof, a member or person associated with a member may rely upon the results of an inquiry conducted by another member or members, provided that:
(i) the member or person associated with a member has reasonable grounds to believe that such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to the member or person associated with a member with the consent of the member or members conducting or directing the inquiry; and
(iii) no member that participated in the inquiry is a sponsor of the program or an affiliate of such sponsor.Incorrect
2310. Direct Participation Programs
Disclosure:
For purposes of subparagraphs (A) or (B) hereof, a member or person associated with a member may rely upon the results of an inquiry conducted by another member or members, provided that:
(i) the member or person associated with a member has reasonable grounds to believe that such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to the member or person associated with a member with the consent of the member or members conducting or directing the inquiry; and
(iii) no member that participated in the inquiry is a sponsor of the program or an affiliate of such sponsor. -
Question 8 of 10
8. Question
Regarding Disclosure, which of the following statement(s) is/are true while executing a purchase transaction in a direct participation program or a REIT?
Correct
2310. Direct Participation Programs
Disclosure:
Prior to executing a purchase transaction in a direct participation program or a REIT, a member or person associated with a member shall inform the prospective participant of all pertinent facts relating to the liquidity and marketability of the program or REIT during the term of the investment. Included in the pertinent facts shall be information regarding whether the sponsor has offered prior programs or REITs in which disclosed in the offering materials was a date or time period at which the program or REIT might be liquidated, and whether the prior program(s) or REIT(s) in fact liquidated on or around that date or during the time period;Incorrect
2310. Direct Participation Programs
Disclosure:
Prior to executing a purchase transaction in a direct participation program or a REIT, a member or person associated with a member shall inform the prospective participant of all pertinent facts relating to the liquidity and marketability of the program or REIT during the term of the investment. Included in the pertinent facts shall be information regarding whether the sponsor has offered prior programs or REITs in which disclosed in the offering materials was a date or time period at which the program or REIT might be liquidated, and whether the prior program(s) or REIT(s) in fact liquidated on or around that date or during the time period; -
Question 9 of 10
9. Question
Which of the following statement(s) regarding Organization and Offering Expenses can be true?
Correct
2310. Direct Participation Programs
Organization and Offering Expenses
No member or person associated with a member shall underwrite or participate in a public offering of a direct participation program or REIT if the organization and offering expenses are not fair and reasonable, taking into consideration all relevant factors.Incorrect
2310. Direct Participation Programs
Organization and Offering Expenses
No member or person associated with a member shall underwrite or participate in a public offering of a direct participation program or REIT if the organization and offering expenses are not fair and reasonable, taking into consideration all relevant factors. -
Question 10 of 10
10. Question
In determining the fairness and reasonableness of organization and offering expenses that are deemed to be in connection with or related to the distribution of the public offering, which of the following statement(s) is/are untrue?
Correct
2310. Direct Participation Programs
Organization and Offering Expenses
In determining the fairness and reasonableness of organization and offering expenses that are deemed to be in connection with or related to the distribution of the public offering for purposes of subparagraph (A) hereof, the arrangements shall be presumed to be unfair and unreasonable if:
(i) organization and offering expenses, as defined in paragraph (b)(4)(C), in which a member or an affiliate of a member is a sponsor, exceed an amount that equals fifteen percent of the gross proceeds of the offering;
(ii) the total amount of all items of compensation from whatever source, including compensation paid from offering proceeds and in the form of “trail commissions,” payable to underwriters, broker-dealers, or affiliates thereof exceeds an amount that equals ten percent of the gross proceeds of the offering (excluding securities purchased through the reinvestment of dividends);
(iii) any compensation in connection with an offering is to be paid to underwriters, broker-dealers, or affiliates thereof out of the proceeds of the offering prior to the release of such proceeds from escrow, provided, however, that any such payment from sources other than proceeds of the offering shall be made only on the basis of bona fide transactions;
(iv) commissions or other compensation are to be paid or awarded either directly or indirectly, to any person engaged by a potential investor for investment advice as an inducement to such advisor to advise the purchaser of interests in a particular program or REIT, unless such person is a registered broker-dealer or a person associated with such a broker-dealer;Incorrect
2310. Direct Participation Programs
Organization and Offering Expenses
In determining the fairness and reasonableness of organization and offering expenses that are deemed to be in connection with or related to the distribution of the public offering for purposes of subparagraph (A) hereof, the arrangements shall be presumed to be unfair and unreasonable if:
(i) organization and offering expenses, as defined in paragraph (b)(4)(C), in which a member or an affiliate of a member is a sponsor, exceed an amount that equals fifteen percent of the gross proceeds of the offering;
(ii) the total amount of all items of compensation from whatever source, including compensation paid from offering proceeds and in the form of “trail commissions,” payable to underwriters, broker-dealers, or affiliates thereof exceeds an amount that equals ten percent of the gross proceeds of the offering (excluding securities purchased through the reinvestment of dividends);
(iii) any compensation in connection with an offering is to be paid to underwriters, broker-dealers, or affiliates thereof out of the proceeds of the offering prior to the release of such proceeds from escrow, provided, however, that any such payment from sources other than proceeds of the offering shall be made only on the basis of bona fide transactions;
(iv) commissions or other compensation are to be paid or awarded either directly or indirectly, to any person engaged by a potential investor for investment advice as an inducement to such advisor to advise the purchaser of interests in a particular program or REIT, unless such person is a registered broker-dealer or a person associated with such a broker-dealer;