Category: Series 62

Exam Alert: SEC Raises Regulation A Limit, Creates Tiers

Effective June 19, 2015 the SEC changed the Regulation A registration exemption for small issues. The change moved from the old standard of $5 million or smaller issues to a new standard of $50 million or smaller issues. In addition, there are two “tiers” for Reg A – offerings up to $20 million are Tier 1, and offerings up to $50 million are Tier 2. Continue reading

Exam AlertEffective June 19, 2015 the SEC changed the Regulation A registration exemption for small issues. The change moved from the old standard of $5 million or smaller issues to a new standard of $50 million or smaller issues. In addition, there are two “tiers” for Reg A – offerings up to $20 million are Tier 1, and offerings up to $50 million are Tier 2.

Tier 2 issuers are required to include audited financial statements in their offering documents and to file annual, semiannual, and current reports with the SEC. Also, if a Tier 2 issue is not listed on a national securities exchange, purchasers in Tier 2 offerings must either be accredited investors or be subject to certain limitations on their investment. Specifically, non-accredited investors cannot spend over 10% of the greater their annual income or net worth for a natural person, or over 10% of the greater of their revenue or net assets for a non-natural person.

Sources:
Amendments to Regulation A (SEC document detailing the change)
Regulation A (current version of Regulation A)

This alert applies to the Series 7, Series 24, Series 62, Series 79, and Series 82.

Exam Alert: FINRA Provides Guidance on Communications

On May 22, 2015, FINRA issued guidance concerning communications with the public. Here are some notable points from the guidance… Continue reading

Exam Alert

On May 22, 2015, FINRA issued guidance concerning communications with the public. Here are some notable points from the guidance.

  • Non-promotional communications (i.e. communications that do not promote or recommend a specific product or service) do not need to be filed with FINRA
  • Electronic forum posts are considered retail communication, but are specifically excluded from filing requirements
  • Template updates do not need to be filed with FINRA if all that changed was statistical information
  • Various non-material changes to previously filed communications do not require refiling the communication
  • A reprinted article does not need to be filed with FINRA
  • Promotional items that only have the name of a mutual fund are not considered “advertisements” under Rule 482
  • If a firm includes mutual fund performance in a retail communication or correspondence, they must also include the fund’s expense ratio
  • Firm must file retail communications regarding registered business development companies
  • A Series 26 registration does not permit a principal to approve retail communications concerning a business development company. The principal must have a Series 24, Series 9/10, or Series 39 registration instead.

Sources:
Regulatory Notice 15-17: Guidance on Rules Governing Communications With the Public
FINRA Rule 2210 Questions and Answers

This alert applies to the Series 6, Series 7, Series 9/10, Series 24, Series 26, Series 39, Series 62, Series 82, and Series 99.

Exam Alert: FINRA Revises Public, Non-public Arbitrator Standards

Effective June 26, 2015, FINRA will alter its rules regarding who will be consider a public or non-public arbitrator. The change will make it so that any arbitrator who has worked in the financial industry for any period of time will be considered a non-public arbitrator. Also, arbitrators who represent investors or the financial industry as a significant part of their business will be considered non-public arbitrators, but may become public arbitrators after a cooling-off period. Continue reading

Exam AlertEffective June 26, 2015, FINRA will alter its rules regarding who will be considered a public or non-public arbitrator. The change will make it so that any arbitrator who has worked in the financial industry for any period of time will be considered a non-public arbitrator. Also, arbitrators who represent investors or the financial industry as a significant part of their business will be considered non-public arbitrators, but may become public arbitrators after a cooling-off period. The cooling-off period lasts five years if they were disqualified from being a public arbitrator based on their own actions. The cooling-off period lasts two years if they were disqualified from being a public arbitrator based on someone else’s actions.

Source: SEC Approves Amendments to Arbitration Codes to Revise the Definitions of Non-Public and Public Arbitrator

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 27, Series 28, Series 62, Series 79, and Series 82.

Study Question of the Month – June

This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, 26, 27, 28, 62, and 99. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 24, Series 26, Series 27, Series 28, Series 62, and Series 99):

Which of the following is true regarding lost and stolen security reporting requirements?

I. All reports of securities that have been lost for one business day should be reported to the Commission

II. All reports of lost securities in which there is a substantial belief that theft was involved should be reported to the Commission

III. All reports of lost or stolen securities should be reported promptly to the FBI

IV. All reports of lost securities in which there is a substantial belief that theft was involved should be reported to the FBI

Answers:

A. I and III

B. II and IV

C. I and IV

D. II and III

Correct Answer: B. II and IV

Rationale: All reports in which there is substantial belief that theft was involved should be reported to the Commission within one business day of such a discovery. In addition, when there is believed to be criminal activity involved, it should be reported to the Federal Bureau of Investigation. Securities that have been lost for two business days should be reported to the Commission when criminal activity is not suspected.

Congratulations Roseann L., this month’s Study Question of the Month winner!

All study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Month – March

This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, 24, 27, 62, 79, 82, and 99. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

Study Question

Question (Relevant to the Series 7, Series 24, Series 27, Series 62, Series 79, Series 82, and Series 99):

Jenny is an employee of a broker-dealer. She is a receptionist at the firm and is not a registered representative. She would like to purchase shares in an IPO that she has recently heard about at her office. Which of the following BEST describes her participation?

Answers:

A. Jenny may purchase shares of the IPO on the same basis as other customers.

B. Jenny is prohibited from purchasing shares of the IPO, but her spouse who she supports may purchase shares on the same basis as other customers.

C. Jenny may purchase shares of the IPO as long as the purchase quantity doesn’t exceed 200 shares.

D. Jenny is prohibited from purchasing shares of the IPO.

Correct Answer: D. Jenny is prohibited from purchasing shares of the IPO.

Rationale: FINRA Rule 5130 – Restrictions on the Purchase and Sale of Initial Equity Public Offerings – prohibits a member firm (broker/dealer) from selling shares of an IPO to an account in which a “restricted person“ has a beneficial interest, subject to certain limited exceptions. All employees of a broker-dealer are considered “restricted persons“ under the rule.

Congratulations! This month’s winner is Alexandra K.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Month – January

This month’s study question from the Solomon Online Exam Simulator question database is now available. Submit your answer for a chance to win a $10 Starbucks gift card! Relevant to the Series 7, 24, 26, 27, 51, 52, 53, 62, 79, 82, 99. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

 Study Question

Question (Relevant to the Series 7, Series 24, Series 26, Series 27, Series 51, Series 52, Series 53, Series 62, Series 79, Series 82, Series 99) 

Jon and Jenny are married. They each have an individual account and they have a joint account owned by both of them. What is the combined maximum SIPC coverage for all their accounts?

Answers:

A. $500,000

B. $1,000,000

C. $1,500,000

D. $750,000

Correct Answer: C. $1,500,000

Rationale: SIPC covers a maximum of $500,000 per “separate customer” at a broker-dealer or clearing firm including up to $250,000 in cash.Total coverage can be higher for multiple accounts if the accounts are considered to be held by separate customers. There are five categories of separate customers defined by SIPC. These categories include 1) individual accounts, 2) joint accounts, 3) accounts held by executors, administrators, and guardians/custodians/conservators (such as UGMA accounts), 4) accounts held by corporations, partnerships, or unincorporated associations, and 5) trust accounts. Thus, two individual accounts held by two different people, and one joint account would be considered three separate customers by the SIPC, and therefore subject to a maximum of $1,500,000 of coverage.

Congratulations! This month’s winner is Abe B.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Month – December

This month’s study question from the Solomon Online Exam Simulator question database is now available. Submit your answer for a chance to win a $10 Starbucks gift card! Relevant to the Series 7, Series 24, Series 62, Series 65, Series 66, and Series 79. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

***Submit your answer to info@solomonexamprep.com to be entered to win a $10 Starbucks gift card.***

 Study Question

Question (Relevant to the Series 7, Series 24, Series 62, Series 65, Series 66, and Series 79): 

A popular type of business structure that does not limit an owner’s personal liability for the actions and/or debts of the entity and does not have to pay corporate taxes on profits is a:

Answers: 

A. LLC

B. C corporation

C. S corporation

D. Sole proprietorship

Correct Answer: D. Sole proprietorship

Rationale: LLCs, S Corporations and C Corporations all offer some form of limited liability to their owners. LLCs and S Corporations are so-called “pass through“ entities and do not pay taxes on profits at the entity level (as opposed to C Corporations which do). The correct answer to this question is a sole proprietorship. A sole proprietorship does not offer an owner any liability protection and is not required to file corporate income tax returns.

Congratulations! This month’s winner is Jeffrey B.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Exam Alert: FINRA Allows Arbitrators to Make Mid-case Referrals in Cases of Serious Threats

Effective October 27, 2014, FINRA has revised its arbitration rules regarding when arbitrators may refer matters to FINRA for disciplinary investigation. Continue reading

Exam AlertEffective October 27, 2014, FINRA has revised its arbitration rules regarding when arbitrators may refer matters to FINRA for disciplinary investigation. Arbitrators may now make such referrals during an arbitration if they become aware of an issue that they believe poses a serious threat that will harm investors unless immediate action is taken. Previously, arbitrators could not make referrals until the conclusion of a case.

Source: Regulatory Notice 14-42: SEC Approves Amendments to the Arbitration Codes to Expand Arbitrators’ Authority to Make Referrals During an Arbitration Proceeding

This alert applies to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, and Series 82.

Study Question of the Month – November

This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 62, 79, and 82. –ANSWER POSTED– Continue reading

This month’s study question from the Solomon Online Exam Simulator question database is now available.

 Study Question

Question (Relevant to the Series 6, Series 7, Series 62, Series 79 and Series 82): 

As the price of the underlying stock of a convertible debenture goes up:

I. The parity value of the bond increases.
II. The current yield of the bond goes up.
III. The parity value of the bond decreases.
IV. The current yield of the bond goes down.

Answers:

A. I and III

B. III and IV

C. II and III

D. I and IV

Correct Answer: D. I and IV

Rationale: With a fixed conversion schedule, the parity value of the bond increases along with the price of the underlying stock. Since the nominal yield of the bond is fixed, the current yield, expressed as a percent of the bond’s price, goes down.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.