Series 79, Chapter 13 - Private Placements
Order by
14 terms
Terms | Definitions |
|---|---|
 What are the qualifications for an offering to be considered a Private Placement? | (1)sophisticated investors, (2) ability to bear the investment's economic risk, (3) parties must have access to the type of information normally provided in a prospectus, (4) parties must agree not to resell the securities to the public. (13-395) |
| PPM | Private Placement Memorandum - the disclosure document prepared for circulation to potential investors in a private placement. (13-397) |
| Offering Circular | an abbreviated version of a PPM often used to provide preliminary info in summary form to potential investors. (13-397) |
| T/F: Because a PPM is not submitted to the SEC, it is subject to different standards for accuracy. | FALSE (13-398) |
| Subscription agreement | sales contract between the investor and the company in a private placement. (13-399) |
| All-or-none private offering | a defined date for the termination of the offering has been predetermined. If the minimum amount of capital has not been raised by that time, the offering is terminated. (13-399) |
| Best efforts private offering | An offering may continue until a minimum amount of capital is raised. (13-399) |
| Rule 5122 pertaining to Member Private Offerings (MPOs) | A FINRA member firm is raising capital for itself or another entity under its control. The rule is intended to prevent conflicts of interest and require sufficient disclosure to investors. (13-400) |
| What are the three major requirements for a Member Private offering according to FINRA Rule 5122? | (1) the member firm must provide investor disclosure through a PPM, term sheet, or other document which discloses the offering expenses and intended use of the funds, (2) the firm must file offering documents and any amendments/exhibits with FINRA's Corporate Financing Department prior to the time they are provided to any investor, and (3) the firm must commit that 85% of offering proceeds will go to business purposes, not including offering costs, discounts, commissions, and other sales incentives. |
| Which of the following are key sources of capital in the equity funding lifecycle of the company? (select all that apply) (I) Venture Capital, (II) Private Equity, (III)Initial Public Offering, (IV) Follow-on offering | All. (13-401) |
| An engagement letter in a private placement contains all of the following information EXCEPT: (a)the engagement of the investment bank as the underwriter, (b) the length of time of the engagement, (c) the material covenants of the offering, (d) the fees or percentage of capital raised to be paid to the investment bank. | C (the material covenants of the offering are outlined in the term sheet). (13-401) |
| The outline of the material provisions and conditions of the offering is known as a: | Term Sheet (13-401) |
| A legally binding contract between the target and each prospective buyer that governs the sharing of non public company information refers to a: | Confidentiality Agreement (13-401) |
| As part of a private placement, the financial advisor prepares an offering document, which is distributed to potential investors. This document is known as a: | Private Placement Memorandum. (13-401) |
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