Rule 4 of 14 in this unit1.4

1.4 Offerings

SIE outline 1.4

Where Contingency Money Waits

In an "all-or-none" or other part-or-none offering, Rule 15c2-4(b) requires the payments to be "promptly deposited in a separate bank account, as agent or trustee for the persons who have the beneficial interests therein", or promptly transmitted to a bank that has agreed in writing to hold them in escrow, until the contingency occurs. NOT "the firm keeps the money and refunds it if the deal fails." Holding contingency funds in the firm's own account is exactly the practice this rule names.

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

Under Regulation D Rule 504, what is the cap on the aggregate offering price, and over what period is it measured?

How sure are you?

Correct: A. Rule 504 caps the aggregate offering price at $10,000,000, measured on a rolling basis, less whatever was already sold in the twelve months before and during the offering.
B. $5,000,000 was Rule 504's cap before it was raised; the current cap is $10,000,000.
C. The cap is measured on a rolling basis, not a one-time lifetime allowance.
D. $1,000,000 and a 90-day window appear nowhere in Rule 504's own cap.

Unit: SIE outline 1.4

Next ruleProblem 1: Two Offerings, One Prospectus

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