New Series 62 Exam

FINRA has updated the Seires 62 outline effective 2/12/2008.

The new question outline is as follows:

Characteristics of Corporate Securities - 28 Questions
Corporate Securities Markets - 31 Questions
Valuing Corporate Securities - 14 Questions
Handling Customer Accounts - 42 Questions
TOTAL 115 Questions

The Holding Period for Rule 144 has been Reduced to 6 Months

Individuals who are not affiliated with the company (non affiliates) may sell their shares under Rule 144 after 6 months and may freely sell their unregistered securities without any volume restrictions after 12 months. Affiliates who are officers, directors or 10% holder may also sell unregistered securities after 6 months but are still subject to the volume limitations of Rule 144 and must still file form 144 at the time of sale.De Minimis Threshold Raised The volume and dollar amount of securities an affiliate may sell with out reporting has been increased. An affiliate in any 90-day period, may sell up to 5,000 shares or may sell stock with a value of $50,000 or less without having to file Form 144.Standard Rule 144 Volume Restrictions Still ApplyUnder Rule 144 the maximum number of shares that can be sold by an affiliate in any 90-day period is the greater of:· 1% of the issuer's total shares outstanding; or· the weekly average of the prior four weeks trading volume.


SEC Regulation NMS

SEC Regulation NMS was designed to improve the regulation of the U S markets as a result of the development of multiple market centers. Under the “order protection rule” SEC Regulation NMS requires market centers to establish and enforce policies and procedures to ensure that trades do not get executed at inferior prices to those protected prices displayed in other market centers. A protected price or quote is one that is displayed in a market center that is immediately and automatically accessible. The access rule of Regulation NMS requires fair and non discriminatory access to quotations and establishes uniform fees for access to various trading platforms and market centers. Regulation NMS prohibits members from engaging in any activity designed to intentionally lock or cross markets and prohibits members from quoting securities valued at more than $1 in sub penny prices.

Securities Offering Reform Rules

The SEC has adopted The Securities Offering Reform Rules which are designed to modify and streamline the filing and communication requirements of issuers under The Securities Act of 1933. The rules focus on the following areas:

The communications related to registered securities offerings
The registration and other procedures in the offering and capital formation processes
The delivery of information to investors, including the timeliness of that delivery

The rules adopted have placed an increased importance on the value of electronic communications and filing and have helped eliminate cumbersome and outdated filing requirements.

SEC Rule 405


SEC Rule 405 defines certain classes of issuers who may be entitled to use a streamlined registration process depending on how the issuer is classified. Well known seasoned issuers and seasoned issuers may take advantage of automatically effective shelf registration of securities by filing form S-3 or F-3. The registration of the securities covered under the filing of form S-3 or F-3 is effective immediately upon filing.

Well known seasoned issuer (WKSI) – is one that within 60 days of its eligibility determination has at least $700 million worth of voting and non voting common equity held by non affiliates or who has issued within the last three years at least $1 billion in non convertible securities for cash (excluding common equity). A WKSI also includes a company that is a majority owned subsidiary of a WKSI

Seasoned Issuer (primary S 3 eligible) – A seasoned issuer is one that meets the requirements of form S-3 to register a primary offering of securities

Unseasoned reporting issuer (not primary S-3 eligible) - Is an issuer who is required to report under The Exchange Act but who does not qualify with the requirements of form S-3 or F-3 to file a primary offering of securities

Ineligible issuer – an ineligible issuer is a reporting issuer who is not current with the filing of reports required under The Securities Exchange Act. Ineligible issuers also include:

Companies who have filed for bankruptcy within the last three years
Blank check companies
Shell companies
Issuers of penny stock
Issuers who are limited partnerships who don’t have a firm commitment underwriting agreement to sell securities
Issuers who have been subject to a stop order or who have been convicted of a felony or misdemeanor under the exchange act directly or indirectly through a subsidiary within the last three years


SEC Regulation S-X

SEC Regulation S-X sets forth guidelines for how issuers who file reports under The Securities Act of 1933 or The Securities Exchange Act of 1934 account for certain assets that appear on their balance sheet. Issuers who normally would account for the value of assets under an equity method may account for the value of the asset under a fair value method. The value of the asset will be reported on the balance sheet at its fair value with changes in the asset’s value between reporting periods being reported on the issuer’s income statement. Under the fair value method the issuer will no longer report its share of income or loss from the investment on its income statement. Issuers of securities whose investment in a subsidiary or entity is equal to 50% or less of the subsidiary or entity and when the income of the subsidiary or entity is 20% or more of the issuer’s income are required to file separate financial statements for that subsidiary or entity in connection with the issuer’s financial statements, when the value of the investment is accounted for under the equity method. If the income generated by the subsidiary or entity is 10% or less than the issuer’s income the issuer may consolidate the income from the investment on its balance sheet and income statements.

SEC Regulation ATS

Technological innovations have allowed an increasing number of market participants to develop alternative trading systems. As market participants developed new trading systems they often chose to allow access to these systems only to subscribers and as a result hidden markets developed. Trading activity in these systems has not been regulated in the way that trading is regulated on a registered exchange. As a result customer orders entered in the systems were not protected to the same degree as if the orders were entered on a registered exchange. As the trading volume and level of services offered through alternative trading systems has increased, alternative trading systems began offering services traditionally only offered by registered exchanges. SEC Regulation ATS was designed to help regulate these alternative trading systems and to bring more uniformity to the national market place. Regulation ATS allows operators of alternative trading systems the choice to register with the SEC as an exchange or as a broker dealer. Regulation ATS also updated the definition of an exchange to include Any organization association, or group of persons that brings together the orders of multiple buyers and sellers and uses established, non-discretionary methods (whether by providing a trading facility or by setting rules) under which such orders interact with each other, and the buyers and sellers entering such orders agree to the terms of a trade. The SEC also further defined the definition of an exchange by excluding from the definition of an exchange systems provided by broker dealers that:

Solely route orders to other facilities for execution
are systems operated by a single registered market maker to display its own bids and offers and the limit orders of its customers, and to execute trades against such orders
are systems that allow persons to enter orders for execution against the bids and offers of a single dealer

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