Free FINRA Series 79 (Investment Banking Representative) Underwriting, Offerings and Registration of Securities Practice Questions
Underwriting, offerings and registration of securities on the FINRA Series 79 exam covers the Securities Act of 1933 registration process, communications safe harbors, the underwriting syndicate and gross spread, Regulation M, and exempt securities and transactions including Regulation D private placements (FINRA).
Sample Questions
Question 1
Easy
Under SEC Rule 415, shelf registration permits an issuer to do which of the following?
Solution
A is correct. Rule 415 (shelf registration) allows an issuer to register a quantity of securities and then offer and sell them on a delayed or continuous basis, drawing down from the 'shelf' over time as market conditions warrant. The base prospectus is filed up front, and a prospectus supplement is filed for each takedown.
Question 2
Medium
A non-reporting issuer wants to raise capital using Rule 506(c) of Regulation D. Which combination of features is permitted under that rule?
Solution
A is correct. Rule 506(c) permits general solicitation and general advertising, but every purchaser must be an accredited investor and the issuer must take reasonable steps to verify each purchaser's accredited status. There is no dollar cap on the amount raised under Rule 506.
Question 3
Hard
A distribution participant in a firm commitment IPO of an actively traded Nasdaq stock wants to support the secondary market on pricing day. Considering Regulation M, which action is permissible?
Solution
B is correct. Under Regulation M Rule 104, a stabilizing bid is permitted only at a price no higher than the offering price (and no higher than the highest independent bid). Such bids are the single sanctioned form of price support; they prevent a decline but may not be used to raise the price.