Unit 8 - Series 66

- Broker Dealer - Agent - Investment Adviser - Investment Adviser Representative

4 Types of Persons

bank, insurance, registered investment companies employee benefit plan managed by investment advisor (or if plan exceeds $5 million) charitable organization over $5 million individual, or joint net worth over $1 million (excluding residency) individual income in excess of $200,000 joint income over $300,000 with the expectation to continue doing that entities made up of accredited investors LLC's over $5 million any entity with investments over $5 million Series 7, 65, 82

Accredited Investors Include

offerings must take place in ONE state Securities must not be re-sold to non-residents 6 months after purchase 80% Rule 80% of revenue from operations in state 80% of assets located in state 80% of proceeds from issuer must be used for business in state

Conditions of Rule 147

506(c) permits advertising but requires issuer to make sure all purchasers are accredited investors 506(b) allows up to 35 nonaccredited investors and no limit on accredited investors

Difference between Rule 506(c) and 506(b) offerings

- Short Term Notes/ Obligations (maximum maturity 270 days) - U.S. & Canadian Government and Municipal Securities (cities, counties, etc) - Financial Institution Securities - Insurance Companies - Public Utility Companies/ Common Carriers - Charitable, Religious, Non-Profit Organizations - Federal Covered Securities

Exempt Securities Under USA of 1956

U.S. gov/ municipal securities (NOT CANADA) Short Term Notes/ Obligations Financial Institution Securities Charitable/ Religious Organizations Public Utility Companies

Exempt Securities under Securities Act of 1933

Pre-Organization Certificate (maximum of 10 subscribers) Transactions with institutions & BD (accredited investors ARE not institutional) Non-Issuer Transactions (secondary market/ unsolicited transactions) Fiduciary Transactions ( Trustee is ONLY FOR bankrupcy) NOT CUSTODIANS Underwriter Transactions

Exempt Transactions under state/federal law

- File Registration Statement - Cooling Off Period (minimum of 20 days) - Effective Date (final price and effective date)

Federal Underwriting Process

The U.S. Supreme Court case resulting in the decision that an investment contract is a security is the

Howey case

the issuer's chief executive officer, chief financial officer, and a majority of the issuer's board of directors.

Under the Uniform Securities Act, a registration statement for a security must be signed by

- Copies of latest prospectus - Copies of articles of incorporation & underwriting agreement - Copies of any other documents filed with SEC

What documents are required under coordination registration

- Minor - Deceased - Legally incompetent

What is NOT a person

- Fixed Insurance, Annuity Contracts, endowment policy - Retirement Plans (IRA, 401K) - Collectibles - Commodities, Commodity Contracts - Condos (Residents) - Currency

What is NOT a security

- Tombstone Ad - Indication of interest (non-binding) - Distribute Pre-liminary prospectus

What is allowed during red herring (preliminary prospectus)?

- No Stop Order from administrator - Registration on file for minimum of 20 days - Statement of minimum and maximum POP (minimum of 2 business days)

What is required during the effective date of coordination registration?

Fraud

Willful attempt to decieve for profit or gain subject to statutory definitions *USA definition does not apply to the sale of non security products such as Fixed Income or Real Estate*

Prospectus

any notice, circular letter, or communication written or broadcast by radio or TV that offers any security for sale or confirms the sale of a security

Issuer

any person who issues (distributes) or proposes to issue a security (companies or governments)

Issuer Transaction

issuer will receive proceeds from the transaction (IPO's)

Federal Covered Securities

listed on a recognized exchange (Nasdaq) investment companies under Investment Company Act of 1940 Transactions exempt under Securities Act of 1933 *OTC markets are not federally covered*

Uniform Securities Act of 1956

model for blue sky laws (state laws) for the purpose of unifying the laws across the states

Notice Filing

opportunity for states to collect revenue in the form of filing fees MAINLY FOR FEDERAL COVERED SECURITIES PRIMARILY USED FOR INVESTMENT COMPANIES UNDER ACT OF 1940

Non-Issuer Transaction

proceeds DO NOT go to issuer (secondary transactions)

Coordination

public offering at the state level that is coordinated with SEC registration

Qualification

state law registration used for intrastate offerings Any security is eligible