Series 79 Exam Review Flashcards

A set of flashcards covering key regulatory rules, filing requirements, and financial formulas for the Series 79 examination.

Registered offering - pre-filing period

Prepare the registration statement and prospectus; conduct the bake-off. No offers are permitted unless a specific safe harbor applies; avoid gun-jumping.

Registered offering - waiting / cooling-off period

After filing and before effectiveness: SEC review, roadshow/marketing, bookbuilding, indications of interest, preliminary prospectus (red herring), permitted tombstone notices and qualifying FWPs.

WKSI

Well-Known Seasoned Issuer: eligible reporting issuer that passes the filing test and either the $700$ million public-float test or $1$ billion registered non-convertible securities test, and is not ineligible.

WKSI equity size test

Worldwide public common-equity float held by non-affiliates of at least $700$ million.

Seasoned issuer

Public float of $75$ million or more and an SEC reporting company for at least $1$ year; uses Form S-3, may use shelf registration, pays fees upfront, and may use an FWP post-filing.

Rule 506(b)

Exemption facilitating an unlimited offering size with no general solicitation permitted; allows unlimited accredited investors and up to $35$ sophisticated non-accredited purchasers.

Rule 506(c)

Exemption allowing general solicitation for an unlimited offering size, provided every purchaser is a verified accredited investor and there are zero non-accredited investors.

Accredited investor - income test

More than $200,000$ individually or $300,000$ jointly in each of the prior $2$ years, with a reasonable expectation of the same in the current year.

Accredited investor - net worth test

More than $1$ million individually or jointly, excluding the value of the primary residence.

Rule 144 holding period - reporting issuer

Generally $6$ months for restricted securities.

QIB

Qualified Institutional Buyer; generally a qualifying institution that owns and invests at least $100$ million in securities on a discretionary basis.

Form 4

Reports most insider ownership changes; due within $2$ business days after the transaction.

Schedule 13D

Investor acquires more than $5\%$ with active ownership intent; file within $10$ days after acquisition.

PRE 14A

Preliminary proxy statement filed for specified non-routine matters, generally at least $10$ calendar days before definitive proxy materials are first sent or given.

FINRA Rule 5130

Restricts specified persons from purchasing new issues of equity securities in IPOs.

Regulation M - 1-business-day restricted period

Restricted period applying when ADTV is at least $100,000$ AND public float is at least $25$ million.

Rule 10b-18 daily volume limit

Generally no more than $25\%$ of ADTV for issuer open-market stock repurchases.

Section 363 sale

Bankruptcy-court-approved sale of debtor assets, usually outside the ordinary course of business and often before a Chapter 11 plan is confirmed.

Bankruptcy waterfall after priority claims

General unsecured creditors \rightarrow subordinated claims \rightarrow preferred shareholders \rightarrow common shareholders.

Formula - Current Yield

$$\text{Current Yield} = \frac{\text{Annual Interest}}{\text{Market Price}}$$

Formula - Equity Value

$$\text{Equity Value} = \text{Total Shares Outstanding} \times \text{Stock Price}$$

Formula - Enterprise Value

$$\text{Enterprise Value} = \text{Equity Value} + \text{Debt} + \text{Preferred Stock} + \text{Noncontrolling Interest} - \text{Cash}$$

Formula - Price-to-Earnings (P/E)

$$\text{Price-to-Earnings (P/E)} = \frac{\text{Stock Price}}{\text{EPS}} = \frac{\text{Equity Value}}{\text{Net Income}}$$

Formula - WACC

$$\text{WACC} = \text{After-tax Cost of Debt} \times \frac{\text{Debt}}{\text{Debt} + \text{Equity}} + \text{Cost of Equity} \times \frac{\text{Equity}}{\text{Debt} + \text{Equity}}$$

Formula - Cost of Equity (CAPM)

$$\text{Cost of Equity (CAPM)} = \text{Risk-Free Rate} + (\text{Levered Beta} \times \text{Market Risk Premium})$$

Formula - Unlevered Free Cash Flow

$$\text{Unlevered Free Cash Flow} = \text{EBIAT} + \text{D\&A} - \text{Capital Expenditures} - \text{Increase in Net Working Capital}$$