Welcome to Soliciting Business and New Issues: the rules that govern how a Series 6 representative can talk about a new offering, what documents must be delivered, and which exemptions let securities skip full SEC registration.
Exam Weight: Part of 24% (12 questions across Chapter 1)
What You'll Learn
In this unit, you'll cover:
- Prospectus Requirements and Timeliness: The three phases of a new issue (pre-registration, cooling-off, post-effective), what the preliminary prospectus (red herring) can and cannot contain, and when each document must be delivered
- Process for Bringing New Issues to Market: Due diligence, registration statements, underwriting agreements (firm commitment vs. best efforts), selling group agreements, and state blue-sky laws
- Municipal New Issues: The Preliminary Official Statement (POS), Official Statement (OS), and Notice of Sale, plus why municipal securities have no "prospectus"
- Regulation D Private Placements: Accredited investors, the limited-offering safe harbors, Form D filing, and the critical distinction between the traditional private placement and the accredited-only general-solicitation variant
- Communications Rules and Prospectus Delivery: The tombstone-advertisement rule, the SEC's prospectus-delivery requirements, and the 48-hour rule
- Exempt Securities and Intrastate Offerings: Government and municipal exemptions, commercial paper, and the intrastate-offering safe harbors
- Antifraud, Competition, and Recordkeeping: The Securities Act's antifraud provision, the noncompetitive-trading prohibition, broker-dealer recordkeeping requirements, and why "exempt from registration" is never "exempt from antifraud"
- Networking Arrangements and Taping Rule: FINRA requirements for broker-dealer activity on bank premises and the size-based thresholds that trigger mandatory call recording
Why This Matters
The Series 6 exam tests whether you can match the right disclosure document to the right phase of an offering, identify which activities are allowed during the cooling-off period, and separate private placement exemptions from public offering requirements. These rules are the compliance foundation for every mutual fund, variable contract, and municipal fund security a Series 6 representative helps distribute.
Let's start with the three phases of a new issue and the documents that go with each.