Ch 7: Q & A

Which of the following events would generally require approval by common stockholders? (PICK TWO) The declaration of a stock dividend The declaration of a stock split The declaration of a cash dividend The election of a director

The declaration of a stock split The election of a director Common stockholders are provided the right to vote on stock splits and director elections, but not on cash dividends and stock dividends. The declaration of cash dividends and stock dividends falls under the authority of the board of directors

A company based in Indonesia would like to raise $140,000,000 of capital by issuing securities in the U.S. without having to register the offering with the SEC. Which of the following offerings would the issuer use? Offering ADRs A Regulation S offering A Regulation A offering A 144A offering

A 144A offering Rule 144A permits the sale by an issuer of an unlimited dollar amount of restricted securities to qualified institutional buyers (QIBs). Investors, generally, must pass a three-part test in order to be considered QIBs. (1) Only certain types of institutions are eligible, including insurance companies, registered investment companies, pension plans, corporations, and registered investment advisers. (2) The buyer must be purchasing for its own account or the account of other QIBs. (3) The buyer must own and invest at least $100 million of securities of issuers not affiliated with the buyer. According to Regulation S, a U.S. company may (quickly) issue an unlimited amount of securities outside the country without filing any documentation with the SEC. Regulation S offerings are not applicable when offering securities to U.S. investors. The maximum size of an offering under a Regulation A exemption is $5,000,000. Offerings of ADRs sold in the U.S. must be registered with the SEC.

Which of the following types of offerings would permit a U.S. public company to quickly raise an unlimited amount of capital in the U.S. from an unlimited number of institutional investors and a small number of retail investors, without filing a disclosure document with the SEC? A Regulation S offering A Regulation A offering A Regulation D offering An offering of securities under Rule 144A

A Regulation D offering Regulation D (Rule 506) allows an unlimited amount of capital to be raised by selling securities to an unlimited number of accredited investors. Regulation D, however, limits the number of nonaccredited or retail investors to 35. Regulation A limits the dollar amount of securities that may be raised by the issuer to $5,000,000. According to Regulation S, a U.S. company may (quickly) issue an unlimited amount of securities outside the country without filing any documentation with the SEC. There are no restrictions as to the type of non-U.S. investors who may purchase the security. To qualify for a Regulation S exemption, the transaction must be offshore, which means no U.S. person may purchase the offering. An offering under Rule 144A may be offered only to qualified institutional buyers.

Although this is a private placement and is exempt from SEC registration, the issuer is required to file ______ with the SEC no later than ___period of time after ______

Although this is a private placement and is exempt from SEC registration, the issuer is required to file [Form D] with the SEC no later than [15 days after the first sale of securities]

A broker-dealer that raises capital and engages in a self-underwriting must _______. Failure to do so would violate FINRA rules, but would not constitute an unlawful activity

A broker-dealer that raises capital and engages in a self-underwriting must [hire a qualified independent underwriter for the purpose of providing a pricing opinion]. Failure to do so would violate FINRA rules, but would not constitute an unlawful activity

GOT THIS ONE RIGHT Which of the following documentation would be defined as a free writing prospectus? A research report issued by a broker-dealer A term sheet summarizing the securities being offered and prepared by an underwriter The dissemination of factual information by an issuer An advertisement by a firm indicating it makes a market or takes proprietary positions in the security

A free writing prospectus is any communication that does not meet the standards of a statutory prospectus. It is considered a solicitation of an offer to buy a security. Examples include term sheets, marketing materials, and press releases whether prepared by the issuer (which is usually the case) or an underwriter. The SEC requires that a legend be included within the free writing prospectus. The legend would indicate whether the issuer will file a registration statement and how a prospectus may be obtained. Research reports and advertisements are defined and subject to FINRA requirements, and are not considered free writing prospectuses

One of your clients is seeking an investment in a tax-advantaged investment. Which of the following investments would qualify to pass through both income and losses? A real estate investment trust A hedge fund A regulated investment company A company that is subject to SEC Section 12 reporting requirements

A hedge fund Most hedge funds are structured as limited partnerships and raise capital by selling units or interests in the partnership to investors. A limited partnership is permitted to pass through both income and losses to investors. A REIT and a regulated investment company (for example, a mutual fund) must pass through a minimum percentage (90%) of their income, but are NOT permitted to pass through losses. A company that is subject to SEC Section 12 reporting requirements is one that, due to the number of its shareholders and value of its outstanding securities, is required to file reports with the SEC. This type of company would distribute cash dividends to shareholders and would not be permitted to pass through losses

The Securities Exchange Act of 1934 addresses audit procedures and responses to audit discoveries. In accordance with generally accepted auditing standards, each audit shall include:

- Procedures designed to provide reasonable assurance of detecting illegal acts that would have a direct and material effect on the determination of financial statement amounts - Procedures designed to identify related party transactions that are material to the financial statements or otherwise require disclosure therein - An evaluation of whether there is substantial doubt about the ability of the issuer to continue as a going concern during the ensuing fiscal year.

Casa de Tofu, Inc. has issued a number of forward-looking statements regarding its business prospects. In hindsight, the majority of the projections have been glaringly inaccurate. Which TWO of the following statements are TRUE? (PICK TWO) - The company has a safe harbor from liability associated with the inaccurate projections. - The company will be prohibited from using forward-looking statements. - If there is no reasonable basis for the statements, the company may be guilty of fraud. - The company is subject to a two-year ban on such statements.

- The company has a safe harbor from liability associated with the inaccurate projections. - If there is no reasonable basis for the statements, the company may be guilty of fraud. Forward-looking statements provide a safe harbor from liability for issues, provided the statements were made in good faith. If the statements were made without a reasonable basis, the statements may be deemed to be fraudulent

All of the following statements are TRUE regarding ADRs, EXCEPT: - The securities are priced in dollars - The instrument's price reflects the value of the underlying stock and currency fluctuations of the underlying issuer's host country - The increased trading volume and enhanced liquidity in the U.S. markets lead to prices that are virtually identical to those of the underlying stock in the issuer's host country - The securities may be listed on an exchange, and may be sponsored by the company

- The increased trading volume and enhanced liquidity in the U.S. markets lead to prices that are virtually identical to those of the underlying stock in the issuer's host country American Depositary Receipts (ADRs) are priced in dollars and are sensitive to the value of the stock and the fluctuations of the currency in the underlying issuer's host country. ADRs may be listed on an exchange and may be sponsored by the company (issuer). The trading volume of ADRs varies considerably among issues. Securities that are not heavily traded may have significant disparities between the price of the ADR and the underlying stock.

When a prospectus is filed as part of the registration statement, what information may be omitted? (Pick two) - The underwriting discounts or commissions - The number of shares or amount of bonds to be issued - The amount of proceeds to be received by the issuer - The intended use of the proceeds of sale

- The underwriting discounts or commissions - The amount of proceeds to be received by the issuer A prospectus may be filed as a part of the registration statement and may be used prior to the effective date of the registration statement. Certain information may be omitted, such as: The offering price of the issue The underwriting discounts (or commissions) Discounts to dealers The amount of proceeds to be received by the issuer Conversion rates Call prices Other matters dependent upon the offering price The number of shares or amount of bonds to be issued will be disclosed, as well as the use of the proceeds of sale

Which of the following securities are exempt from SEC registration? - A Eurodollar bond - Municipal bonds that are not considered investment-grade - An American Depositary Receipt (ADR) that will be listed on the NYSE - A Treasury note

Certain securities are exempt from the registration and prospectus requirements of the Act because of the nature of the issuer. Among the exempted securities are: - U.S. government and U.S. government agency securities - Municipal securities (***The municipal bond is exempt regardless of its rating.) - Securities issued outside the U.S. (a Eurodollar bond) Not all ADRs need to be registered with the SEC, only those issuers offering securities in the U.S. Only sponsored ADRs may issue and register securities with the SEC. Only sponsored ADRs may list on the NYSE or Nasdaq

GOT THIS ONE RIGHT Mr. Brown is a 15% owner of SamCo, a company whose stock is listed on the New York Stock Exchange. His wife also owns 4% of SamCo. If Mrs. Brown wishes to sell some of her shares, she: Must do so according to Rule 144 May only do so with the permission of her husband May do so provided her husband also sells shares May sell the shares without restriction

Control stock is stock acquired by affiliated persons. This includes officers, directors, owners of more than 10% of the stock of a corporation, and their immediate families. Since Mr. Brown owns 15% of SamCo, Mrs. Brown is selling her shares as an affiliated person

On September 1, an underwriter offers stock that has been registered with the SEC. This is the first offering of stock made by the issuing company. The issue will be listed on the New York Stock Exchange. A dealer that subsequently sells the stock in the secondary market will be required to furnish a prospectus: Only if the dealer was a member of the underwriting syndicate or selling group For a period of 25 days following the initial offering For a period of 40 days following the initial offering For a period of 90 days following the initial offering

For a period of 25 days following the initial offering When a new issue is sold to the public, a prospectus must be given to all potential purchasers. In addition, dealers who sell the security in the aftermarket, even if they were not involved in the original distribution, are required to provide a copy of the prospectus. This lasts for a period of 25 days following the initial offering for issues to be listed on an exchange (including Nasdaq). If the offer is an IPO and the securities are not listed on an exchange, the prospectus must be provided for 90 days. If the issue is not an IPO, and the securities will not be listed on an exchange, dealers must deliver prospectuses for 40 days after the offering date.

The Zanzibar Corporation has previously filed for shelf registration with the SEC. With one month still remaining on its shelf registration, Zanzibar filed a new registration statement with the SEC. Which TWO of the following statements are TRUE regarding the additional filing? I) If Zanzibar is a WKSI, the new registration statement is effective immediately. II) Zanzibar will have two shelf registrations effective at the same time. III) If Zanzibar is not a WKSI, the securities covered by the prior registration may continue to be sold until the new registration statement is effective. IV) The shelf registration will automatically be renewed. I and III I and IV II and III II and IV

I and III Under the original shelf registration, Zanzibar would have had three years from the initial effective date to sell the securities that had been registered with the SEC. As the three year period closes, the company could file a new registration statement. This would become an automatic shelf registration if Zanzibar has well-known seasoned issuer (WKSI) status. If Zanzibar is not a WKSI, the shelf registration would not be automatically registered. Securities covered by the prior registration statement may be offered and sold until the effective date of the new registration, or 180 days after the third anniversary of the initial date of the prior registration statement, whichever comes first. Zanzibar may not have two shelf registrations simultaneously effective. The offering of the securities on the earlier registration statement will be terminated once the new registration becomes effective

GOT THIS ONE RIGHT An individual owns restricted stock. He would not be required to file a Form 144 for a sale of less than: I) 5,000 shares II) 10,000 shares III) $50,000 IV) $100,000 I and III only I and IV only II and III only II and IV only

I and III only An individual is allowed to sell restricted stock without filing under Rule 144 or reporting the sale if the sale is for less than 5,000 shares and $50,000.

A Well-Known Seasoned Issuer (WKSI) has filed a shelf registration statement with the SEC. The company will be offering senior debt securities, subordinated debt securities, common stock, preferred stock, and warrants. Which TWO of the following statements are TRUE? I) For each offering of securities, the issuer is required to file an S-3 registration statement. II) For each offering of securities, the issuer is required to file a prospectus supplement. III) The issuer is permitted to use a term sheet for each offering, provided it is filed as a free writing prospectus. IV) The issuer is permitted to use a term sheet for each offering and is not required to file it as a free writing prospectus. I and III I and IV II and III II and IV

II and III A Well-Known Seasoned Issuer (WKSI) is permitted to use an automatic shelf registration. The issuer must file an S-3 registration form for a specified dollar amount and type(s) of securities that it is planning to offer. Each time the issuer offers securities, it will file both a preliminary and then a final prospectus supplement with the SEC (for the specific securities being issued). According to SEC Rule 433, the issuer is permitted to use a term sheet for each offering, provided it is filed as a free writing prospectus

GOT THIS ONE RIGHT: An insider of XYZ Corp. buys company stock in the open market at $63 a share. Ten months later, the insider wishes to sell the stock at the current market price of $68 a share. Which TWO of the following statements are TRUE regarding this transaction? I) The sale is subject to the 6-month holding period under Rule 144. II) The sale is not subject to the 6-month holding period under Rule 144. III) The sale is subject to the volume limitations under Rule 144. IV) The sale is not subject to the volume limitations under Rule 144. I and III I and IV II and III II and IV

II and III Rule 144 requires that restricted (unregistered) stock be held for 6 months before it can be resold. Control stock (registered stock purchased by insiders) is not subject to a holding period requirement under Rule 144. Both restricted and control stock are subject to the volume limitations under the Rule.

The sale of restricted securities by an officer of the issuer would be in compliance with SEC Rule 144 if, among other things, the: I) Securities are listed on an exchange II) Officer has owned the securities for at least 6 months III) Broker-dealer distributing the securities acts in an agency capacity IV) Broker-dealer has solicited orders to purchase the restricted securities I and III only I and IV only II and III only II and IV only

II and III only Restricted stock may be sold if it has been held for at least 6 months and was paid for in full at least 6 months prior to sale. The broker-dealer handling the sale under Rule 144 may do so through a broker's transaction that does not involve a solicitation. The securities do not need to be listed on an exchange.

BMC, a blank check company, wants to raise $950,000 of capital within the next 6 months. An investment banker suggests selling the securities in a private placement. Which TWO of the following statements are TRUE regarding this offering? I) The issuer could rely on Rule 504 of Regulation D, and this would be an exempt transaction. II) The issuer could not rely on Rule 504 of Regulation D, and this would not be an exempt transaction. III) Since the issuer is a blank check company, all investors would need to receive a disclosure document. IV) If the issuer was not a blank check company, all investors would not need to receive a disclosure document. I and III I and IV II and III II and IV

II and IV Rule 504 of Regulation D allows an issuer to offer securities of up to $1,000,000 within a 12-month period. Provided the issuer complies with all the provisions of Regulation D, this private placement is exempt from SEC registration. There are three types of issuers that are not permitted to use this exemption: a company subject to the SEC's reporting requirements (a reporting company), an investment company, and a development stage company that has no specific business plan or purpose (e.g., a blank check company). In addition, the issuer is not required to provide a disclosure document under Rule 504. Under Regulation D, if the issuer offers securities exceeding $1,000,000, any nonaccredited investor must receive a disclosure document. The SEC does, however, recommend that an issuer provide the same information to accredited investors to avoid the antifraud provisions of federal securities regulations

Which of the following statements is TRUE regarding a private placement of securities under Regulation D? - If the offering does not exceed $1,000,000, the issuer is not required to file a Form D. - If the offering exceeds $1,000,000, the issuer is required to provide a disclosure document only to nonaccredited investors. - If the initial offering does not exceed $1,000,000, and the issuer sells additional securities within 12 months, the additional offering of securities would not be exempt from registration. - If the offering does not exceed $1,000,000 and the issuer meets certain conditions, the holding period on the securities is three months.

If the offering exceeds $1,000,000, the issuer is required to provide a disclosure document only to nonaccredited investors. Rule 504 of Regulation D allows an issuer to offer securities of up to $1,000,000 in a 12-month period. Provided the issuer complies with all the provisions of Regulation D, this private placement is exempt from SEC registration. The issuer is still required to file Form D with the SEC no later than 15 days after the first sale of securities. Under Regulation D, if the issuer offers securities exceeding $1,000,000, any nonaccredited investor must receive a disclosure document. The SEC does, however, recommend that an issuer provide the same information to accredited investors to avoid the antifraud provisions of federal securities regulations. If the initial offering does not exceed $1,000,000 and the issuer sells additional securities within 12 months, these securities may be exempt from registration. For example, an issuer offers $1,000,000 and 5 months later offers another $3,000,000. The first offering could be sold under Rule 504 and the second offering could be sold under Rule 505 (private exempt offerings not exceeding $5,000,000). If the offering does not exceed $1,000,000 and the issuer meets certain conditions, investors may resell the securities immediately. The conditions are generally based on registration and exemption requirements of the states in which the issuer is offering the securities.

Which of the following BEST defines an at-the-market offering? - It is an unregistered offering by a publicly traded company - It is a registered offering by a private company - It is a registered offering by a publicly traded company over a period of time - It is a registered offering by a publicly traded company at one time

It is a registered offering by a publicly traded company over a period of time An at-the-market offering permits a company to raise capital and issue shares over a period of time rather than all at once. This method of raising capital provides flexibility to the issuer when selling its shares, since it not limited to selling the securities at one time, as is the case in a registered secondary (follow-on) offering. An at-the-market offering is a registered issue of a publicly traded company. It may only be conducted by a company that is eligible to use Form S-3 or F-3, and sold pursuant to a shelf registration

An investor purchasing securities under Section 4(6) of the Securities Act is required to receive: A private placement memorandum A prospectus An offering circular No disclosure document

No disclosure document According to Section 4(6) of the Securities Act, an offering by an issuer may be considered an exempt transaction if certain conditions are met. The amount of the offering may not exceed $5,000,000. No advertising or public solicitation may be used to offer the securities, and the offering may be sold only to accredited investors. There are no document delivery requirements, but the transaction is subject to the antifraud provision of the Act. This exemption is different from Regulation D where a limited number (35) of nonaccredited investors may participate

GOT THIS ONE RIGHT: Piggyback registration rights are BEST defined as: - A provision that allows investors to sell their shares when the issuer conducts a private placement - A provision that requires the issuer to conduct a rights offering - A provision that allows investors to register and sell shares when the issuer conducts a public offering - A provision that obligates an issuer to file a registration on behalf of selling shareholders

Piggyback registration rights permit an investor to register and sell securities when the issuer conducts a public offering. Investors who purchase securities as part of a private placement may negotiate to have this provision inserted since they will be able to sell a certain amount of their restricted securities without needing to comply with the volume limitations of a Rule 144 sale. The issuer agrees to register common shares or the underlying common shares upon conversion (in the case of the warrants) and pay all related expenses incurred in the registration. Demand registration rights obligate an issuer to file a registration statement covering a potential sale under certain conditions. This may occur if a large holder of the company's shares would not be able to sell their securities through a Rule 144 sale. (The size may exceed the volume limitations.) Therefore, piggyback registration rights allow the holder to sell shares whenever the issuer files a registration statement, whereas demand registration rights require the issuer to file a registration statement

The features of Regulation A offerings are not identical to those of registered offerings. Similar features include:

Purchasers must be provided with an offering circular that is similar in content to a prospectus: - The securities can be offered publicly and are not restricted. - The principal advantages of Regulation A offerings are: - The financial statements are simpler and do not need to be audited. - There are no Exchange Act reporting obligations after the offering, unless the company has more than $10 million in total assets and more than 500 shareholders. - Companies may choose among three formats to prepare the offering circular, one of which is a simplified question-and-answer document. - You may test the waters to determine if there is adequate interest in your securities before going through the expense of filing with the SEC. If a company intends to "test the waters," it may use general solicitation and advertising prior to filing an offering statement with the SEC, thus offering the advantage of determining whether there is enough market interest in the securities before the company incurs the full range of legal, accounting, and other costs associated with filing an offering statement. The issuer may not solicit, or accept money, until the SEC staff completes its review of the filed offering statement, and the company delivers the prescribed offering materials to investors.

Northern Railways is a publicly traded company. Forty percent of the shares are owned by Pathway, a publicly traded investment group. Your firm is advising Northern Railways on a capital restructuring. If possible, Northern Railways would like to avoid a prospectus delivery requirement when the restructuring takes place. You would advise the company that all of the following events would require a prospectus to be delivered to Northern Railways shareholders, EXCEPT a(n): Transfer of assets of Northern Railways to another company Exchange of Northern Railways shares for shares of Pathway Repurchase of its shares by Northern Railways Reclassification of Northern Railways' shares

Repurchase of its shares by Northern Railways SEC regulations require issuers to provide a prospectus to shareholders in advance of the various transactions, including reclassifications, mergers, consolidations, and the transfer of assets to another party. A repurchase by a company of its own stock is regulated under Rule 10b-18 of the 1934 Act. The activity does not require a prospectus delivery to shareholders

A venture capital fund acquires 100,000 shares of restricted stock of an issuer quoted on the OTC Bulletin Board. In order to resell this stock under SEC Rule 144, all of the following steps would need to be taken EXCEPT the fund: - Must hold the stock for at least 6 months - May sell the stock through a broker's transaction only - Might be limited in the amount of stock it can sell during any 90-day period - Must file a notice with the SEC

Sales of securities under Rule 144 may be done through a broker's transactions or in transactions made directly with market makers.

In a Rule 144A transaction, each of the following statements is TRUE EXCEPT: - The seller, or any person acting on its behalf, such as a broker-dealer, must reasonably believe that the purchaser is a qualified institutional buyer (QIB) - The buyer must be able to establish its credentials as a QIB, through relevant documentation - The only documentation acceptable for establishing that the purchaser is a QIB is audited financial statements (or their equivalent, for foreign issuers) - If the seller has no reason to question the accuracy of documentation provided by the purchaser, it has no duty to inquire further about the purchaser's status as a QIB

The SEC has provided several examples of documents that can be relied on by the seller when establishing its belief that a purchaser is a qualified institutional buyer. Audited financial statements and certification from the issuer are common methods of demonstrating that the purchaser is a QIB. Choice c is not true since its states that the only acceptable documentation is an audtied financial statement.

An issuer of an IPO has filed a registration statement and underwriters are currently using a red herring as the offering document. Which of the following actions would require the issuer to submit a final prospectus for this offering? The offering price has been established. The financial statements are stale. The number of shares sold by selling shareholders decreased. The offering price is more than 15% higher than was anticipated.

The offering price has been established. An issuer files an S-1 Form in the case of an IPO. Part of the S-1 Form is the preliminary registration statement or red herring that is used as a disclosure document for potential investors. In most cases, the offering price is omitted from the red herring (although a price range is permitted). Once this has been established, the issuer would file the final prospectus with the offering price, as well as other information based on the offering proceeds. If any material information is added or altered in respect to the original filing, an amended S-1 would be filed. Some of these events would include stale financial statements, a change in the number of shares being offered, material changes related to the issuer's business, change of officers or directors, and additional required exhibits. Once the offering price is established, the issuer would file the final prospectus with the SEC.

An investment banking representative has been asked by her client about the prospectus delivery requirement for a new issue by the company. If the company is listed on Nasdaq: There is no prospectus delivery requirement The requirement is for 25 days from the effective date The requirement is for 40 days from the effective date The requirement is for 90 days from the effective date

There is no prospectus delivery requirement BECAUSE the issuer is already a reporting company. A dealer selling securities in the secondary market must provide prospectuses to customers if new securities of that class were recently sold by the issuer under a registration statement. Prospectuses must be delivered for 40 days after the effective date in the case of issuers with publicly traded securities already outstanding, or 90 days for IPOs. There are two exceptions. If an issuer was subject to the reporting requirements of the Securities Exchange Act of 1934 prior to the filing of the registration statement, there is no prospectus delivery requirement for dealers. If the issuer was not a reporting company prior to filing, but will be listed on an exchange or on Nasdaq as of the effective date, the requirement applies for 25 days. The main purpose of this rule is to provide investors with information concerning an issuer of securities. If the issuer was already a reporting company, existing information is assumed to be readily available to the public through the SEC's EDGAR system

GOT THIS ONE RIGHT Certain offerings of securities may be registered on a continuous or delayed basis. All of the following instruments may qualify for continuous or delayed offerings, EXCEPT: - Securities issued in connection with an exercise of a convertible instrument - Securities issued in connection with business combination transactions - U.S. Treasury instruments - Securities sold on behalf of a subsidiary of the registrant

U.S. Treasury instruments Rule 415 of the 1933 Securities Act offers issuers the flexibility to offer securities on a continuous or delayed basis by filing a shelf registration. Securities that are guaranteed by the U.S. government are exempt securities. No registration of U.S. Treasury instruments is required

Volume and holding period restrictions do not apply to the resale of private placements (Regulation D offerings) when: Purchasers' representatives assist investors Both parties are accredited investors The transaction is initiated by a registered principal The purchaser is a qualified institutional buyer

Under Rule 144A of the Securities Act, the owner of securities obtained through a private placement may resell those securities to a qualified institutional buyer without the volume and holding period restrictions of Rule 144. Rule 144: Holding Period for restricted and control - Restricted Stock: 6 months [Must be paid for in full at least 6 months prior to sale] OR ONE YEAR if the issuer is a non-reporting company - Control Stock: No holding period

REITs are regulated as securities under the Securities Act of 1933. An investor purchasing a REIT in the primary market must receive _____

a prospectus

In a Reg-A offering, there must be at least ___ time period separating the use of a solicitation statement and the first sale of securities

there must be at least 20 days separating the use of a solicitation statement and the first sale of securities

If the SEC has entered an order temporarily suspending a Regulation A exemption, the underwriter, issuer, or the selling security holder may request a hearing within how many days? 10 20 30 45

The underwriter, selling security holder, or issuer may request a hearing within 30 days. If a hearing is not requested, the temporary order suspending the Regulation A exemption becomes permanent on the 30th day. If a hearing is requested, it will be held within 20 calendar days of the SEC's receipt of the request