Securities Registration: EB-5 Securities Transactions

Transcription

1 Securities Registration: EB-5 Securities Transactions Presented by: Brian Marks Managing Director (212) Major U.S. Securities Regulations Securities Exchange Act of 1934 o Regulates the activities of broker-dealers and other persons doing securities business with the investing public o Requires registration of persons o Created the Securities & Exchange Commission (SEC) Investment Advisers Act of 1940 o Regulations the activities of persons providing advice about securities for compensation What s the difference? o Broker-dealers and agents receive commissions for transactions o Investment Advisers receive an hourly or flat rate for providing advice 2 1

2 Financial Industry Regulatory Authority (FINRA) SEC delegates authority to a number of Self-Regulatory Organizations, or SROs. FINRA o Mission Statement: FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. o How do they achieve this? Require registration of broker-dealers & their representatives Require broker-dealers to generate written supervisory procedures o Broker-dealer s interpretation of FINRA rules 3 Financial Industry Regulatory Authority (FINRA) Requires registration of all Broker-Dealers doing business within the United States o Any legal entity engaged in the business of effecting securities transactions for its own account or for others. o FINRA has over 4,200 member firms. Requires registration of personnel o Persons associated with a broker-dealer who are engaged in the investment banking or securities business including the functions of supervision, solicitation or conduct of business in securities or who are engaged in the training of persons associated with a member for any of these functions are designated as representatives. o FINRA has over 630,000 registered representatives. 4 2

3 Financial Industry Regulatory Authority (FINRA) Categories of Representative Registration o Series 7: Associated person of a broker-dealer who effects securities transactions on behalf of customers o Series 79: Advising on or facilitating debt or equity securities offerings through a private placement or a public offering Advising on or facilitating mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions 5 State Regulations ( Blue Sky Laws) Blue Sky laws protect individual investors from unfair or manipulative practices in the context of selling securities o State securities administrator enforces each state s blue sky laws. NASAA: North American Securities Administrators Association o Fosters consistency between state regulations Requires state registration of broker-dealers & their agents o Series 63 examination (applies to all states) 6 3

4 The Role of Knopman Financial Training Provide information about the various exams Provide study materials Provide training o Live classes o Virtual classes o On-Demand training o Mobile App Help you get from here, to registered! 7 Still to Come Registering to take the Exam Series 7, Series 63, Series 79 o Exam Specifications o Series 7 vs. Series 79 Study Strategies Knopman tools Questions? 8 4

5 Securities Registration: EB-5 Securities Transactions Presented by: Brian Marks Managing Director (212) You have decided to register, what now? Complete Form U4 with sponsoring broker-dealer o Basic info about registrant and employer o Fingerprints o Registration category (e.g. Series 7, Series 79) o State registration o Other professional designations (e.g. CFP) o Residential history 5 years o Employment history 10 years o Criminal / regulatory / financial disclosures Once Form U4 is filed with FINRA, 90-day window commences o Not taking exam within 90-day window will incur a fee to open a new window 10 5

6 Administration of Exam Testing Centers (choose based on geographical convenience) o Pearson Vue o Prometric Administration of Exam Cost of Exam o Series 7: $290 o Series 79: $290 o Series 63: $96 Cancellation / Rescheduling policy o More than two weeks prior to scheduled exam date: no charge o Between 3-10 business days prior to exam date: ½ of cost of exam o Within 2 business days of exam date (or no show): 100% of cost of exam 12 6

7 Administration of Exam Consequences for failing examination o 1 st failure: must wait at least 30 days prior to retaking exam o 2 nd failure: must wait at least 30 days prior to retaking exam o 3 rd failure: must wait at least 6 months prior to retaking exam 13 Administration of Exam General Exam Information Government ID required o Must match information on Form U4 o Cannot be expired Personal articles left in locker Permitted materials in testing room (all provided by testing center) o Basic 4-function calculator o Erasable marker and erasable notepad o Exhibit Book (Series 79 only) 14 7

8 Administration of Exam General Exam Information Question Format multiple choices with 4 answer choices Middle of the exam is most challenging Score report is received upon completion of examination o Breakdown by unit o Overall Pass or Fail this is all that matters! 15 Series 79 Exam Specifications 185 questions, 5 hours o 175 graded questions o 10 pre-test, ungraded, questions Passing score is 73% 16 8

9 Series 79 Exam Content Collection, Analysis and Evaluation of Data 75 questions o Fixed income & equity securities o Calculations from financial statements o Overall, exam is about 30% math o Sample question: Using the company s Income Statement, determine the offering price of an IPO priced at 13x FY1 earnings. 17 Series 79 Exam Content Securities Registration, Underwriting and, Financing Activities 43 questions o SEC registration statements o SEC filings o Securities Underwriting o Exempt Transactions o Private Placements o Sample Question: What is the purpose of piggyback registration rights as it relates to a Rule 144A transaction? 18 9

10 Series 79 Exam Content Mergers and Acquisitions, Tender Offers & Financial Restructuring 34 questions o M&A Process o M&A Documents o Tender Offers o Bankruptcy o Sample Question: Who benefits from a stepped-up basis for a transaction executed using the IRC 338(h)10 election? 19 Series 79 Exam Content General Securities Industry Rules 23 questions o FINRA Regulations o Sample Question: What are the rules that apply if a registered rep at a broker dealer wants to get a second job owning and managing a piece of property? 20 10

11 Series 7 Exam Specifications 2 sections on exam 130 questions and 3 hours per section o 125 graded questions o 5 pre-test, ungraded questions o minute break in between sections Passing score 72% 21 Series 7 Exam Content Seeks Business for the Broker-Dealer through Customers and Potential Customers 68 questions o Communications with the Public (e.g. advertisements) o Costs and Fees of Various Investments o Securities Investor Protection Corporation o Required Disclosures by Registered Reps o Sample Question: What is the difference between the supervisory requirements for retail communications, institutional communications and customer correspondence? 22 11

12 Series 7 Exam Content Evaluates Customers Other Security Holdings, Financial Situation and Needs, Financial Status, Tax Status, and Investment Objectives 27 questions o Customer Suitability o Diversification of a Portfolio o Risks of Equity Securities o Risks of Debt Securities o Sample Question: A married couple is preparing to pay tuition for a child in 8 months. Which of the following would be the most appropriate investment? 23 Series 7 Exam Content Opens Accounts, Transfers Assets, and Maintains Appropriate Account Records 27 questions o Different Types of Customer Accounts (e.g. individual or joint) o Anti-Money Laundering Regulations o Recordkeeping o Customer Account Transfers o Sample Question: A customer deposits $9,000 in cash on each of four consecutive days. Which document would the firm be required to file with the Treasury Department? 24 12

13 Series 7 Exam Content Provides Customers with Information on Investments and Makes Suitable Recommendations 70 questions o Impact of market events on various investments o Disclosures of unique risks of various securities o Consistency of investments with a customer s investment portfolio o Sample Question: Hedge funds differ from mutual funds with regard to which types of risk? 25 Series 7 Exam Content Obtains and Verifies Customer s Purchase and Sales Instructions, Enters Orders, and Follows Up 58 questions o Different types of orders o Quotes for various securities o Margin trading o Order tickets & trade confirmations o Sample Question: A customer sells short 100 shares of ABC stock. Which order could the customer place to protect the short position if the stock exceeds a certain level? 26 13

14 Series 7 vs. Series 79 Which Exam Should I Take? Series 79 FINRA / SEC Regulations Debt / Equity Securities Equity Trading (less detail) SEC registration (greater detail) Underwriting (greater detail) Exempt Transactions SEC Filings Financial Statements Valuation Analysis Mergers & Acquisitions Tender Offers Bankruptcy Series 7 FINRA / SEC Regulations Debt / Equity Securities Equity Trading (greater detail) SEC registration (less detail) Underwriting (less detail) Exempt Transactions Customer Accounts Options Retirement Plans Mutual Funds Taxation Margin Accounting 27 Series 63 Exam Specifications 65 questions, 75 minutes o 60 graded questions o 5 pre-test, ungraded questions o Passing score 72% State Securities Acts and related rules and regulations 36 questions o Sample Question: A broker-dealer has an office in Florida, sends mail to a client who is a Texas resident, and the mail is post marked from a satellite office in Nebraska. In which states is the firm required to be registered? Ethical practices and fiduciary obligations 24 questions o Under which circumstances can an agent borrow money from a client or lend money to a client? 28 14

15 Knopman Financial Training Background Information Knopman Financial Training was established in 1991 by Harvey Knopman. We provide our clients with a superior range of services that are of the highest quality and integrity. Our training programs have achieved among the highest pass rates in the industry. At Knopman, we leverage new technologies to provide best-in-class training through both traditional classroom settings and digital media. Knopman Financial Training provides exceptional service, personalized attention, and real-time support. 29 The Knopman Approach Forming a Partnership Personal Attention The Right Material On-Demand & Mobile Resources Benchmark Exams The Proper Follow Up 30 15

16 Knopman Study Resources Textbook & Practice Exams Key Supplements Real Time Support Live Classes On-Demand Training Mobile App 31 Mobile App Capabilities On-Demand Training Practice Quizzes Flashcards 32 16

17 On-Demand Training 33 Practice Quizzes 34 17

18 Flashcards 35 Classroom Resources Classroom Handouts Promote note taking and retention of content Diagnostic Exams Track student performance and provide useful data 36 18

19 Recommended Study Strategy (Series 7 or Series 79) Read textbook o 2-3 weeks Review lectures or live class o 1-2 weeks Complete tests & review supplements o 2-3 weeks Total : 5-8 weeks o Assumes evening and weekend study time 37 Knopman Support Provided Throughout Prep Process Order study material Choose learning format o On-demand / Mobile App o Live Classroom o Both o Learning format can be changed Personal introduction received within 1 week o Login information for online tests 38 19

20 Knopman Support Provided Throughout Prep Process Quarterly courtesy follow-up Push notifications for rule changes o JOBS Act o Dodd-Frank o FINRA 2210: Communications with the Public (Feb 4, 2013) Supplements sent 2-3 weeks prior to exam Courtesy check-in two days prior to exam o Available to answer questions evenings and weekends 39 How to Order from Knopman Discounted rate for AREAA Global Summit Attendees o Complete order form with Knopman pamphlet o Call our office Textbook can be provided now, or shipped to another location 40 20

21 Q&A? Knopman Resources? Study Process? Series 7 vs. Series 79? 41 Questions? brian@knopman.com Sharing Our Knowledge. Achieving Your Goals. 21