Session 1 A

Series 7 Web-Class Eight 3-Hour Sessions v16
Copyright Notice
All rights, including without limitation all patents, trade names,
trademarks, service marks, copyrights, and all other proprietary rights, in
and to the content of the transmission that follows which includes both
audio and visual content (collectively “Content”), are owned by Securities
Training Corporation. Except as specifically stated in the last sentence of
this slide, ALL RIGHTS ARE EXPRESSLY RESERVED.
By receiving the transmission you expressly agree that the Content
Securities Training Corporation contained therein is limited to you for your own personal, non-
commercial use only and for NO OTHER purpose or use.
Any use of Content, including but not limited to, reproduction,
Series 7 modification, distribution, republication, recording or storing without the
prior written permission of Securities Training Corporation is strictly
General Securities prohibited. However, for your personal, non-commercial use only, you
may print one copy of the slides provided you keep intact, and
Registered Representative prominently displayed, all copyright and other proprietary notices.
© Securities Training Corporation. All rights reserved. Series 7 Web-Class Eight 3-Hour Sessions v16 1 © Securities Training Corporation. All rights reserved. 2
About the Series 7 Series 7 Exam Breakdown

250 multiple-choice question exam
Section # of Questions
6 hours allowed 1) Customer and the Registered Rep.
• Two three-hour sessions 2) Brokerage Products
70% passing score 3) Derivatives
30, 30, 180 waiting period for failures 4) Handling Customer Accounts
5) Markets and Regulations
6) Order Entry, Confirmation, & Settlement
7) Factors Affecting Security Value
© Securities Training Corporation. All rights reserved. 3 © Securities Training Corporation. All rights reserved. 4
© Securities Training Corporation. All rights reserved. 1

STC Study Materials Supplemental Study Aids

22-Chapter Study Manual Progress Prep Exams -- CD-ROM or On-Line
6 Additional Exams
14 Final Examinations • First two exams represent halves of the book
125 question comprehensive exams • Exam 1: Chapters 1 – 13
Written explanations provided • Exam 2: Chapters 14 – 22
• Exams 3 and 4: Comprehensive Finals
• First attempt
• Question / Answer method • Municipals and Options: Topical Exams
• Complete all final exams before progressing to Closed-Book
• Second attempt DVD Video Learning Program
• Closed-Book method Covers heavily tested topic areas: Markets and Regulations;
• Scores of 80% + indicate adequate retention Bond Concepts; Municipal Bond Market; Fundamentals of
• Exam Preparation By Topic (on-line or CD)
Options; Advanced Options Strategies and Margin Accounts;
• Provides specific support by topic and Investment Companies
• Allows student to focus on areas of weakness
Supplemental Study Aids Supplemental Study Aids

CD Audio Learning Program Securities Training Corporation
Covers heavily tested topic areas including: Bond
Basics, Investment Companies and Retirement Plans; Regional Sales Offices:
Margin; MSRB Rules; and, Options
New York: 800-782-1223
STC Virtual Class Offerings Chicago: 800-782-8505

Internet-based Training with Audio and Visual Support
• Audio available via telephone or VOIP Boston: 800-782-2678
• Regular Classroom Activities
• Questions and Answers San Francisco: 800-642-4566
• In-session Quizzes
• Homework Assignments
Visit us on the web at www.STCUSA.com

Shareholders
Rights of Shareholders
Limited Liability
Evidence of Ownership
Transferability
Inspection
Session One Dividends
• Determined by the board; not
- Corporations and Equities guaranteed
- Investment Banking • All classes of Preferred must be
- Federal Securities Acts paid in full for common to receive
any dividend
© Securities Training Corporation. All rights reserved. Series 7 Web-Class Eight 3-Hour Sessions v16 9 © Securities Training Corporation. All rights reserved. 10
Liquidation Hierarchy Common Stock Voting Rights

Unpaid workers and Taxes Covers various issues affecting the corporation such as
directors, authorizing additional shares, and stock splits
Secured Creditors
(NOT for dividends -- cash or stock)
Unsecured Creditors (debentures)
Preferred Stockholders If shareholders wish to have someone else vote their

shares they sign a “Proxy”
Common Stockholders
Voting “power of attorney”
Solicited by corporations
• Required for NYSE and Nasdaq-listed issuers
• Regulated by SEC under the Act of ‘34

Preemptive Rights Warrants

A security that allows the holder to buy shares of common
Available to Common Shareholders stock at a pre-set price
Ability to maintain percentage of ownership Attached to an offering of a bond or preferred stock of the
company
Accomplished through the distribution of “rights”
When issued, the pre-set price is set at a premium to the
Current stockholders receive one right for every share current market price
owned Long-term – expire in years; may be perpetual
Can be “detached” and traded separately
Short-term right enabling holders to buy below the
market price before stock is offered publicly
Issued to
Rights Short-term Discount
shareholders
Attached to
Warrants Long-term Premium
a new issue
Stock Splits Stock Split Example

Company’s attempt to improve marketability of their stock
Example:
No economic gain or loss for holders Investor owns 100 shares of XYZ at $180. XYZ
No change to issuer’s capitalization Company executes a 3:1 split.
No change to holder’s percentage of equity ownership
No immediate tax liability Shares Value Per Total
Owned: Share: Value:
Two Types: Before the Split:
Forward – more shares, lower price
Reverse – fewer shares, higher price After the Split:
Dividends per share also adjusted proportionately

Preferred Stock Types of Preferred Stock

Designed to provide returns comparable to bonds. Par value Cumulative
is normally $100, with dividends stated as a percentage of par. Entitled to unpaid dividends (those “in arrears”) before
common is paid
Types:
Callable: Issuer has the ability to repurchase the stock, ABC Co. intends to pay common stockholders a dividend in Year 3
typically at a premium
Participating: Investor may receive additional dividends Dividend paid to: Year 1 Year 2 Year 3
based upon profits of company 8% non-
Convertible: Investor can convert into a predetermined $0 $2
cumulative
number of common shares
6% cumulative $0 $2
• Example: An investor owns a 6% preferred stock which is
convertible at $20. What is their conversion ratio?
Common
Par
Conversion Price
American Depository Receipts (ADR)
A receipt for foreign securities held in a U.S. bank located in

the foreign country
ADRs facilitate the trading of foreign securities in the U.S.
The receipts trade in U.S. markets like common shares
Priced in dollars
Dividends in dollars Underwriting and
Communication in English
the Securities Act of 1933
Global Depository Receipts (GDR)
Receipts trade in more than one country
Denominated in investor’s home currency
© Securities Training Corporation. All rights reserved. 19 © Securities Training Corporation. All rights reserved. Series 7 Web-Class Eight 3-Hour Sessions v16 20

The Primary Market Types of Underwriting

-Needs capital Who is
Issuer -Hires underwriter Type of
Comments responsible for
Underwriting
unsold shares?
-Facilitates distribution
Underwriting Manager -Assumes liability that varies with the type
Firm Syndicate “takes down” the
of offering Commitment entire offering
(Investment Banker)
-Signs U/W Agreement with issuer
Best Efforts Syndicate sells what it can
-B/D’s assisting in selling and sharing liability
Syndicate Members Best Efforts Offering is cancelled if all
-Signs Syndicate Agreement with manager
All-or-None shares are not sold
-B/D’s accepting no liability, assist in sales only Best Efforts Offering is cancelled if a set
Selling Group -Signs Selling Agreement with manager Mini-Maxi minimum is not sold
Syndicate agrees to buy any
IPO versus Subsequent Offering Stand-by shares not purchased by the
stockholders in a rights offering
The Underwriting Spread Securities Act of 1933

Underwriter purchases from issuer at $19, and sells at the POP of $20
Regulates the primary market and requires to securities to be
registered unless they are:
Manager’s Fee Member’s/U/W Fee Concession
Exempt from registration or
$.20 $.30 $.50 Sold under an exemption
Scope of the law:

Example: 1,000 shares are sold to a customer at $20 per share
To provide for “full and fair disclosure”
If Manager If Member If Selling Prevention of fraud in the sale of new issues
Sells Sells Group Sells No ruling as to investment merit -- SEC “no approval clause”
on prospectus cover
Customer pays:
Issuer receives: Liability
Unconditional for issuers regarding information to investors
Manager: Conditional for underwriters who must perform:
• reasonable investigation
Member: • “due diligence”
Selling group:

Full Registration Timeline New Issue Regulations

1) Pre-registration Period
Shelf Registration (Rule 415)
Document preparation
No communication with the public Allows the flexibility of selling on delayed or continuous basis
for up to years
2) File Registration Statement; begin 20-day cooling-off period
No sales or money accepted “Green Shoe Clause”
Issuer distributes preliminary prospectus (Red Herring) Over-allotment provision
• All information except exact price and date Allows for expansion of issue by a maximum of
• Non-binding indications of interest
"Blue Sky" the issue (register at the state level) Stabilization
• Registration of B/Ds, RRs and securities
Intervention in the secondary market in order to keep the
• Notification (Filing), Coordination, Qualification
market price of a new issue from falling
Final due diligence meeting held prior to effective date
Syndicate manager places one bid (unqualified) to buy the
securities at a price not higher than the POP
3) Post-registration Period (Effective date)
Only form of price manipulation allowed by SEC
Sales confirmed and final prospectus delivered
Disclosed in prospectus
Publish Tombstone Ad
New Issue Rule Exempt Securities

Prohibits member firms from selling equity IPOs to accounts in which
a restricted person has a beneficial interest (more than 10%) The following securities are exempt from registration:
Restricted persons include: U.S. Government and Agency Securities
Member firms and any member firm employees
Immediate family members of member firm employees if: Municipal Securities
• There is material support or sharing a household or Securities issued by banks
• Purchasing from family member’s firm Those issued by non-profit organizations
Other persons materially supported by the employee Short term corporate debt; not exceeding days
Exemption is provided for issuer-directed sales if: Small Business Investment Company issue
The associated person or a member of the associated person’s
immediate family is an employee or director of the issuer All remain subject to antifraud provisions of the Act
Firms must have written verification as to eligibility of purchasers

(updated annually)

Exempt Transactions Exempt Transactions

Rule 147: Intrastate Exemption
Regulation D – Private Placement
A bulk of issuer’s activities must be confined to one state
• 80% of assets located A sale of securities directly to “accredited” investors
• 80% of revenues generated and (and to a limited number of non-accredited investors)
• 80% of proceeds used in the state No limit on number of accredited investors
AND • Officer / Director of Issuer
• 100% of investors are state residents • Institutions
• Individuals who have met a financial test
No resale to non-residents for from last sale. • Net Worth of:
or
Regulation A: Small Issue Exemption • Annual Income of:
Capital limitation of no more than $5,000,000 raised over
12-months
“Offering Circular” - disclosure document
Regulation D (continued) Rule 144

No more than Non-accredited Investors
Offering Memorandum Rule 144 - Permits the sale of restricted and control stock
Purchaser’s Representative appointed by investor
Restricted stock (unregistered)
Control stock (Affiliated) – registered stock owned by

Purchasers sign an “Investment Letter” officers, directors, or greater than 10% shareholders
Indicates purchase is for investment purposes, not for
immediate resale - No required minimum holding period
Restricted stock; stop transfer instructions
• Can only be sold to the public if registered or sold in
accordance with Rule 144

Rule 144 Rule 144: Maximum Sale

To sell restricted or control stock: ABC Inc. has 5,700,000 shares outstanding with recent
SEC must be notified by filing Form 144 at the time the sell trading volume as indicated:
order is placed
One then has 90 days to sell the specified securities Week Ended: Volume Traded:
2/28 62,000
Maximum amount that can be sold:
2/21 60,000
Greater of of outstanding shares or the average
2/14 56,000
weekly trading volume over the
2/7 58,000
Exception to notifying the SEC: 1/31 58,000 Multiple Choices:
1. 57,000
If selling 5,000 or fewer shares and worth $50,000 or less
2. 58,000
3. 58,800
4. 59,000
Rule 144A
Permits sales of certain unregistered securities to “Qualified

Institutional Buyers” (QIBs)
No limitations on amounts or frequency of transactions
Qualified Institutional Buyers

• Only institutions
The Securities
• Minimum $100 million under management
Exchange Act of 1934
© Securities Training Corporation. All rights reserved. 35 © Securities Training Corporation. All rights reserved. Series 7 Web-Class Eight 3-Hour Sessions v16 36

Securities Exchange Act of 1934 Securities Exchange Act of 1934

Secondary Market Regulation
Anti-Manipulation Rules
Creation of SEC
“Front-running” - trading ahead of client orders
• Utilizes various Self Regulating Organizations (SROs)
“Painting the Tape” – creating a misleading appearance of trading
Reporting requirement for publicly-traded companies
Pegging – manipulative activity used to keep a price from falling
Empowered the Federal Reserve to regulate the extension Capping – manipulative activity used to keep a price from rising
of credit where securities are the collateral (Regulation T)
Short Sales (defined) Tender Offers
• Sale of securities that are borrowed from a B/D
• Seller will return securities to the B/D at some future date Offer to purchase a security at a stated price, usually at a
• Sellers anticipate a price decline enabling them to cover their premium, by a corporate suitor, to gain control of a target
position at a lower price corporation
Regulation SHO (modernized short selling practices) Can only tender shares when long the common stock or its
• B/Ds must mark the ticket “short” and be able to locate equivalent: convertibles, warrants and rights
securities to be sold short
Insider Regulation Regulation FD

According to the Act of ’34
Any officer or director of issuer or greater than 10% owner
If inside information is disclosed to an individual who
Must register with SEC within days
Report purchases and sales by the end of the
does not have a fiduciary relationship with the company,
business day following the transaction the information must be disseminated to the public
Cannot sell short
Cannot keep “short swing” profits; held less than months If the disclosure was accidental, the information must be
released within 24 hours
According to Insider Trading Act of 1988
Anyone who possesses material, non-public information cannot If the disclosure will be intentional, e.g. a conference
use it to make a profit or to avoid a loss call, the information must be released simultaneously
Penalties for violations:
• Criminal – $5 million fine or 20 years imprisonment or both
• Civil – SEC can sue for three times the damage
(“treble damages”)

Session 1 A

Enviado por

Dados do documento

Descrição original:

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Session 1 A

Enviado por

Direitos autorais:

Formatos disponíveis

Series 7 Web-Class Eight 3-Hour Sessions v16

About the Series 7 Series 7 Exam Breakdown

70% passing score 3) Derivatives

© Securities Training Corporation. All rights reserved. 1

STC Study Materials Supplemental Study Aids

Supplemental Study Aids Supplemental Study Aids

STC Virtual Class Offerings Chicago: 800-782-8505

© Securities Training Corporation. All rights reserved. 2

Liquidation Hierarchy Common Stock Voting Rights

Preferred Stockholders If shareholders wish to have someone else vote their

© Securities Training Corporation. All rights reserved. 3

Preemptive Rights Warrants

Stock Splits Stock Split Example

Dividends per share also adjusted proportionately

© Securities Training Corporation. All rights reserved. 4

Preferred Stock Types of Preferred Stock

American Depository Receipts (ADR)

A receipt for foreign securities held in a U.S. bank located in

© Securities Training Corporation. All rights reserved. 5

The Primary Market Types of Underwriting

The Underwriting Spread Securities Act of 1933

Scope of the law:

© Securities Training Corporation. All rights reserved. 6

Full Registration Timeline New Issue Regulations

New Issue Rule Exempt Securities

Firms must have written verification as to eligibility of purchasers

© Securities Training Corporation. All rights reserved. 7

Exempt Transactions Exempt Transactions

Regulation D (continued) Rule 144

Control stock (Affiliated) – registered stock owned by

© Securities Training Corporation. All rights reserved. 8

Rule 144 Rule 144: Maximum Sale

Permits sales of certain unregistered securities to “Qualified

No limitations on amounts or frequency of transactions

Qualified Institutional Buyers

© Securities Training Corporation. All rights reserved. 9

Securities Exchange Act of 1934 Securities Exchange Act of 1934

Insider Regulation Regulation FD

© Securities Training Corporation. All rights reserved. 10

Você também pode gostar