Series 82

January Study Question of the Month

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

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

***Comment below or submit your answer to info@solomonexamprep.com to be entered to win a $20 Starbucks gift card.***

This question is relevant to the SIE, Series 6, 7, 22, 24, and 82 exams.

Question:

Which of the following people would be considered a specified adult?

Answer Choices:

A. A 16 year old with autism

B. A 30 year old

C. A 60 year old with a heart condition

D. An 18 year old in a coma

Correct Answer: D

Explanation: A specified adult is a natural person age 65 and older or a natural person age 18 and older who the member firm reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests.

SEC Announces Major Revisions to Registration Exemptions Aimed at “Harmonizing” Regulation A Offerings, Regulation D Private Placements, and Crowdfunding

On November 2, the SEC announced a collection of rule changes meant to, in the announcement’s words, “harmonize, simplify, and improve” its “overly complex exempt offering framework.” The changes affect Regulation A, which governs small public offerings; Regulation D, which governs private placements; and Regulation CF, which governs crowdfunding. This system of exemptions allows various small offerings to avoid the normal registration process required by the Securities Act.

The rule changes should provide a clearer choice as to which exemption is most appropriate to an issuer, based on how much the issuer needs to raise and other factors.

The changes also seek to clarify how issuers can avoid “integration” of exempt offerings. Integration is the risk that exempt offerings will be considered a single offering by the SEC, because the offerings are too similar.

Highlights of the changes include:

If two exempt offerings are conducted more than 30 days apart, they are almost always protected from integration.
An issuer can “test the waters” with potential investors before deciding which exemption it will use for an offering. Test-the-waters communications solicit interest in a potential offering before the issuer has filed anything with the SEC. Previously, an issuer could only test the waters after deciding that its potential offering would take place under Regulation A.
Caps on the amount that may be raised through these exemptions have been increased:
- Crowdfunding: from $1.07 million to $5 million
- Regulation A, Tier 2: from $50 million to $75 million
- Regulation D, Rule 504: from $5 million to $10 million
Make “bad actor” exclusions more consistent across different exemptions.

The rule changes will take effect early next year. Until the changes take effect, securities exam questions will continue to be based on the old rules. FINRA Exams affected by these rule changes include the SIE, Series 6, Series 7, Series 14, Series 22, Series 24, Series 65, Series 66, Series 79, and Series 82.

Earning Your Securities License May Now Make You an Accredited Investor

On Wednesday, the SEC finalized rule changes that will broaden its definition of “accredited investor” to encompass industry professionals who have earned certain FINRA licenses. Continue reading

On Wednesday, the SEC finalized rule changes that will broaden its definition of “accredited investor” to encompass industry professionals who have earned certain FINRA licenses.

An accredited investor is an investor considered sophisticated enough to weigh an investment’s merits independently. Accredited investors have easier access to certain types of investments, such as private equity offerings.

Under the newly expanded definition, General Securities Representatives (Series 7), Private Securities Offerings Representatives (Series 82), and Licensed Investment Adviser Representatives (Series 65) are now accredited investors. The SEC indicated that it may add other FINRA licenses later. Note that passing the exam by itself does not make you an accredited investor – you must have and maintain the license.

The rule change also allows “spousal equivalents” such as domestic partners to qualify as accredited investors based on the total income and assets of both partners, a benefit previously limited to couples who are legally married. Native American tribes and foreign governments now qualify as accredited investors as well.

The Solomon Exam Prep team is always on the lookout for how current developments affect the securities industry. For more updates from our Industry News blog, use the subscribe form on this page.

Testimonial Tuesday — July Edition

I took the Series 82 just four weeks after passing the SIE. Continue reading

April Study Question of the Month

Submit your answer to info@solomonexamprep.com to be entered to win a $20 Starbucks gift card. Continue reading

Submit your answer to info@solomonexamprep.com to be entered to win a $20 Starbucks gift card.

Question

When inherited, the basis of a depreciated asset is?

A. Stepped up

B. Stepped down

C. Carried over

D. Carried under

Answer: B. Typically, when an asset is inherited, the value of the asset has increased since it was purchased and the heir gets to “step up” (raise) the basis of the inherited property to the fair market value at the date of death. So, for example, if Grandpa bought shares of XYZ for $1,000 in the previous century, and the shares are worth $1 million on the date of Grandpa’s death, the basis for tax purposes is stepped up to $1 million to the lucky recipient. This means that capital gain escapes any federal taxation.

The basis “step-up” rule can become a “step-down” rule as well. So if an asset’s value has declined and someone inherits the asset, for the sake of taxes, the basis of the asset is stepped down (lowered) to the fair market value on the date of the owner’s death. This loss of basis can be avoided by the owner selling any depreciated property before death, so he or she can reap the tax losses.

October Study Question of the Month

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

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

Question

Relevant to the Series 7, Series 62, Series 65, Series 79, Series 82, and Series 99.

What is the holding period for restricted securities issued by a company that files reports with the SEC?

A. Six months

B. Nine months

C. Twelve months

D. Securities issued by a company that files with the SEC are never restricted

Answer: A. Rule 144 requires purchasers of restricted securities to hold them for a certain amount of time before they sell them. If the issuer is a company that files reports with the SEC, the holding period is six months. If the issuer is a non-reporting company, the holding period is 12 months.

September Study Question of the Month

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

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

Question

Relevant to the Series 62, Series 79, and Series 82.

Which of the following is an advantage of a 506(b) offering?

A. Sold shares are not restricted

B. It may be advertised to the public because it is considered a public offering

C. Instead of a prospectus, it may use a briefer document called an offering circular

D. It has no dollar limit

Answer: D. A private placement offering under Regulation D, Rule 506(b) has no dollar limit. The other three responses are advantages of Regulation A offerings.

August Study Question of the Month

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

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

Question

Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, Series 82, and Series 99.

Which of these records about your customer Doug is your firm required to retain for five years?

A. Doug’s customer ledger

B. A SAR you filed on Doug

C. A complaint Doug filed about you

D. A confirmation of one of Doug’s trades

Answer: B. The general tier of recordkeeping is three years, six years, and lifetime, although there are some records with retention periods of four or five years. Additionally, the firm must keep most records easily accessible for the first two years.

Customer ledgers fall in the six-year tier, Suspicious Activity Reports (SARs) fall in the five-year tier, customer complaints fall in the four-year tier, and trade confirmations fall in the three-year tier.

July Study Question of the Month

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

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

Question

Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, Series 82, and Series 99.

Bob owns convertible preferred stock in BigCo. Which of the following is a taxable event for Bob?

A. He converts it into common stock

B. Due to a corporate restructuring, he receives additional shares

C. He receives a cash dividend that is less than the amount that the share price declined last quarter

D. Due to a corporate merger, his shares are exchanged for shares in LargerCo

Answer: C. Receiving a dividend (even a qualified dividend) is a taxable event. When a company merges with another company, it may give its shareholders stock in a new company in exchange for the stock they currently hold. This is usually not a taxable event, meaning the shareholder does not have to pay taxes on the new shares at the time of the exchange. Moreover, if the company gives shares of common or preferred stock to shareholders because of a corporate restructuring or bankruptcy, this is also not a taxable event. Additionally, the conversion of convertible preferred stock (or bonds) to common stock is not a taxable event.

Time is of the essence for anyone who wants to take the Series 82 exam

Alert! Starting October 1, the number of exam questions for the Series 82 Private Securities Offerings Representative licensing category will increase from 100 questions to 125 questions. That’s because starting October 1, the Series 82 exam, like all FINRA representative level exams, is being divided into two exams: the SIE (75 questions) and the Series 82 “top-off” (50 questions). More work!

But if you don’t want to take 25 additional questions, not to mention take two exams instead of one, then Solomon Exam Prep recommends you take your Series 82 exam pronto, before October 1.

Series 82 students will also be happy to know that Solomon Exam Prep has just updated its Series 82 Video Lecture with updates about Regulation D, Rule 147, and research report rules. The Solomon Exam Prep Video Lecture is a critical piece of the Solomon Securities Exam Prep system that also includes the Exam Guide, the Audio Guide and the Exam Simulator.

Spring is in the air and there has never been a better time to take the Series 82!