Rule 2 of 14 in this unit1.4

1.4 Offerings

SIE outline 1.4

Forty-Eight Hours Before the Confirmation

Rule 15c2-8(b): in a distribution for an issuer that had not previously filed Exchange Act reports, the broker-dealer must "deliver a copy of the preliminary prospectus to any person who is expected to receive a confirmation of sale at least 48 hours prior to the sending of such confirmation." NOT "the preliminary prospectus goes out with the confirmation." Arriving together is the violation: the 48 hours the rule creates never happened.

The method for this kind of question
  1. 1h45m ÷ 80 items = 78.75 seconds per item. A sequencing item should cost you 30.
  2. Ask one question first: where on the clock is this stem standing?
  3. Nothing before the filing: Securities Act Section 5(c). "Before the registration statement was filed" is the trap.
  4. 20 days is Section 8(a)'s default: the SEC may accelerate it, and a pre-effective amendment restarts it.
  5. Delivery ladder in decreasing order of how unknown the issuer was: 90 · 40 · 25 (Rule 174(d)) · none (Rule 174(b)).
  6. "Purchased the entire issue" → firm commitment. "Best efforts" → the issuer keeps the unsold shares, and contingency money goes to a separate account or escrow under Rule 15c2-4(b).
  7. Next: SIE Practice Quiz #3: Offerings & Underwriting, every answer explained.

Now answer

1 question on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

Vantage Rail runs a best-efforts offering of 1,000,000 shares at $18.00. The underwriter places 720,000. Who holds the remaining 280,000 shares, and what did Vantage Rail raise?

How sure are you?

Correct: B. In best efforts, unsold shares stay with the issuer, never left. Proceeds are only on shares actually placed: 720,000 x $18.00 = $12,960,000.
A. Puts the shares with the underwriter, which only happens in a firm commitment, and overstates proceeds as if all 1,000,000 sold.
C. Correct proceeds figure, wrong holder of the unsold shares.
D. Correct holder, but overstates proceeds as if the full 1,000,000 shares sold.

Unit: SIE outline 1.4

Next ruleThe Delivery Ladder: 90, 40, 25, None

The whole unit · Your plan