Securities Registration

The SEC-required formal disclosure document for a securities offering, mandated by the Securities Act of 1933. It contains the investment objectives, principal risks, fees and expenses, performance history, management information, and procedures for buying and selling shares. For mutual funds, variable annuities, and other continuously offered products, the prospectus must be delivered to investors no later than the confirmation of the sale.

Example: When a client purchases shares of a mutual fund, the broker-dealer must ensure that the client recei...

A state securities registration method under the Uniform Securities Act for securities simultaneously registered with the SEC under the Securities Act of 1933. The state registration becomes effective at the same time as the SEC registration, provided no stop order is in effect and no stop-order proceeding is pending, the registration statement has been on file with the Administrator for at least 10 days, and a statement of the maximum and minimum proposed offering prices and maximum underwriting discounts and commissions has been on file for 2 full business days (the Administrator may shorten the 2-business-day period and may waive either or both conditions). Most efficient method for multi-state public offerings because it coordinates federal and state filings into a single effective date.

Example: TechStart Inc. plans to raise $50 million through an initial public offering (IPO) to investors in 1...

A state securities registration method under the Uniform Securities Act (also called registration by notification) with the strictest eligibility of the three methods. It is open only to seasoned issuers that are also registering with the SEC and meet strict operating-history, SEC-reporting and financial tests, or to open-end funds and unit investment trusts with a prior qualification in the state. A seasoned issuer's registration becomes effective with the federal registration once its filing has been on file for the required period (5 business days in the model act, or a shorter period the Administrator allows) and the fee is paid, and a qualifying fund's becomes effective on the business day of filing or when its existing registration expires, whichever is later, unless the Administrator orders an earlier date, in each case if no stop order or stop-order proceeding is pending. It is not the notice filing that federal covered securities such as mutual funds make, where the state may require copies of SEC filings, a consent to service of process, and fees but conducts no registration review.

Example: An established company whose stock is quoted over the counter (so it is not a federal covered securi...

An SEC safe harbor that governs the resale of restricted securities (acquired in unregistered transactions such as private placements) and control securities (held by affiliates or insiders, however acquired). Restricted securities carry a holding period of 6 months for a company that has been SEC-reporting for at least 90 days or 1 year for a non-reporting company. Affiliate sales are further capped each 90-day period at the greater of 1% of the outstanding shares of that class or the average weekly trading volume over the preceding 4 weeks.

Example: A venture firm buys unregistered shares in a Regulation D private placement of a public, SEC-reporti...