Bubba has been classified as a restricted person according to Rule 2790. He may purchase equity securities of an IPO except:
Answer(s): D
when the new issue of securities is purchased pursuant to a best effort basis. All the other choices are allowable under the rule “except” this one.
An ERISA benefits plan qualified under Section 401(a) of the Internal Revenue Code may:
Answer(s): A
purchase any IPO security provided the plan is not sponsored solely by a broker/dealer. An ERISA plan that is qualified under Section 401(a) may purchase any IPO security provided that the plan sponsor is not a broker/dealer.
The term “secondary market” refers to:
Answer(s): B
trading in outstanding issues. Secondary market transactions involve trading in securities after the original issue is made. When an issuer offers new securities to the public it is a “primary offering”.
An issuer is most likely to request an investment letter from the purchaser in connection with which of the offerings?
Answer(s): C
a private placement. Normally, private placements are conducted with an investment letter.
In the distribution of a new issue underwriters or selling group member are prohibited from:
withholding blocks of a new issue in the member’s account. Underwriters and selling group members are prohibited from keeping blocks of a new issue for their own accounts.
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