9.9 - State Securities Registration Procedures
Under the Uniform Securities Act, the Administrator has the power to deny, suspend, or revoke the registration of an issue if it is in the public interest and: the issuer discloses in the prospectus that there is virtually no chance that the company's business model will be successful and investors should anticipate losing their entire investment. the Administrator of another state has revoked the issue's registration. an officer of the registrant has been convicted of a securities related crime. the prospectus contains misstatements of nonmaterial information. A) II and III. B) I and II. C) I and III. D) II, III and IV.
Answer: A If the Administrator of another state has revoked an issue's registration, the USA considers that just cause for denial in this state. Conviction of an officer of the issuer for a crime related to the securities industry will invariably lead to denial or revocation. Disclosure that the company is not expected to be successful is not a cause for denial; all that is required is full disclosure. Misstatements of material information would be cause for action by the Administrator, but nonmaterial, by definition, does not impact an investor's decision-making process.
An application to register securities may be filed under the USA by a(n): agent of a broker/dealer. broker/dealer acting on behalf of the issuer. person on whose behalf the offering is made. issuer. A) II, III and IV. B) I only. C) II and IV. D) I, II, III and IV.
Answer: A Registration statements may be filed by a broker/dealer, a person on whose behalf the offering is made (e.g., a offering made by a large shareholder), or more commonly, the issuer.
An issuer would like to register its new offering in the state. Which of the following is not required in order for the registration to become effective? A) A consent to service of process. B) A listing of the amount of securities to be offered in this state. C) A rating in one of the three highest grades by a recognized rating agency. D) A statement of the expected use of the proceeds of the offering.
Answer: C Ratings are not a requirement for a security to be registered.
When registering a security under the Uniform Securities Act, an issuer or its representative must indicate all of the following EXCEPT: A) the effective date of the offering. B) all other states in which the security is to be registered. C) the amount of securities to be offered in the state. D) adverse rulings by a court, regulatory authority, or the SEC with respect to the offering.
Answer: A The effective date is determined by the state Administrator or the SEC, not the issuer of the security. Issuers must indicate all other states in which the security is to be registered. The amount of securities to be offered in the state, for which a specific registration is sought, must be disclosed in addition to any adverse rulings related to the offering.
All of the following must be specified in the state registration statement of a security EXCEPT: A) the total amount of the security that will be offered in this state. B) all other states where the security is currently registered or will be registered. C) the total amount of the security that will be offered in each state. D) a stop order from another state that affects the offering of the security within that state.
Answer: C It is not necessary to list the total amount of the security to be offered in all states. However, for filing fee purposes, the amount to be sold in this state must be disclosed.
Under the Uniform Securities Act, which of the following statements is NOT true regarding registration of securities? A) A post-effective amendment must be filed if there are any material changes in the information on file. B) The Administrator may require periodic sales and other reports to be filed. C) Registration statements that comply with the Uniform Securities Act automatically comply with requirements in the Investment Company Act of 1940. D) The Administrator may require the proceeds of the sale of securities be escrowed until sales reach a certain level.
Answer: C The Administrator may require certain reports to be filed and the registration statement and other offerings be updated as necessary. A post-effective amendment must be filed if there have been any material changes to information on file. Administrators may require the proceeds of the sale to be escrowed when it would take specific amounts of money to achieve the primary purpose of the offering. Registration of investment companies must comply with the Investment Company Act of 1940, and investment companies are not required to register with the state.
Which of the following statements are TRUE? It is unlawful for anyone to conduct business as a broker/dealer in a state unless also registered as an agent. A registration statement may be filed by an issuer itself, a broker/dealer, or any other person on whose behalf the offering is to be made. Registration of an agent is not effective when the agent is not associated with a broker/dealer registered under the act. Registrations are automatically renewed one year after approval, provided no violations occurred during the year. A) I and III. B) I and IV. C) II and IV. D) II and III.
Answer: D It is unlawful for anyone to conduct business as a broker/dealer in a state unless properly registered as such; an agent is not a broker/dealer. A registration statement can be filed by an issuer itself or any other person on whose behalf the offering is to be made, or by a broker/dealer. Registration of an agent is not effective when the agent is not associated with a broker/dealer registered under the act. Registrations expire December 31st unless renewed, regardless of violations.
If securities of an issuer registered with the state are outstanding, how long after the effective date of registration must an issuer wait before the registration may be withdrawn? A) 6 months. B) 18 months. C) Only at the administrator's discretion. D) 12 months.
Answer: D Registration statements are usually effective for a period of 1 year from the effective date and may not be withdrawn during this period if any of the securities of the issuer of the same class are still outstanding.
An issuer is planning to offer securities for sale in State A and several other states. Which of the following statements regarding registration in State A under the Uniform Securities Act is NOT true? A) Every registration must specify the total amount of securities to be offered in State A, the states in which offering is to be made, and any adverse order or judgment by a regulatory authority. B) The Administrator may by order permit omission of items of information or documents from a registration statement. C) The Administrator may, as a condition of registration by qualification or coordination, rule that the securities may only be sold on a specified form of subscription and that a signed copy be filed with the Administrator. D) The Administrator may not, as a condition of registration by qualification or coordination, require the security be deposited in escrow and the proceeds be impounded until the issuer receives a specified amount.
Answer: D The Administrator may, as a condition of registration by qualification or coordination, require the security to be deposited in escrow and the proceeds to be impounded until the issuer receives a specified amount. It is true that every registration must specify the amount of securities to be sold in the state, the states in which offering is to be made, and any adverse order or judgment of a regulatory authority. The Administrator may by order permit omission of any item of information or document from a registration statement. The Administrator may, as a condition of registration by qualification or coordination, rule that the securities may only be sold on a specified form of subscription and that a signed copy be filed with the Administrator.
With regard to the registration requirements of the Uniform Securities Act, which of the following statements are TRUE? Only the issuer itself can file a registration statement with the Administrator. An application for registration must indicate the amount of securities to be issued in the state. The Administrator may require registrants to file quarterly reports. A) I and II. B) I and III. C) I, II and III. D) II and III.
Answer: D The USA requires that any application for registration include the amount of securities to be sold in that state. The Administrator has the power to request regular filings of reports, but no more frequently than quarterly. While the issuer is most commonly the registrant, application may also be made by selling stockholders and broker/dealers.