This chapter covers 27% of the Series 79 exam (approximately 20 questions) and walks through the full lifecycle of bringing a security to market: from registration through pricing and into the post-execution period.
What You'll Learn
| Unit | Topic | Key Concepts |
|---|---|---|
| 1 | Public Offerings | The registration spine and the three periods (pre-filing, waiting, post-effective); registration statement and prospectus content; forms of prospectus; permissible communications by period; shelf registration and WKSI status; JOBS Act and emerging growth companies; corporate financing rule mechanics and conflicts of interest; Regulation FD; civil liability and anti-fraud |
| 2 | Underwriting Syndicate Activities | Syndicate agreement architecture (AAU, underwriting agreement, selected-dealer agreement); types of commitments (firm vs best efforts vs all-or-none vs mini-max); contingency offering mechanics; lock-up agreements; Regulation M filings; price and concession disclosure |
| 3 | Execution and Distribution | Sales-force education, road shows, investor targeting, building the book and indications of interest, sizing / pricing / timing, allocation philosophy and fairness |
| 4 | Post-Execution Financing Activities | Stabilization (passive vs active bids), syndicate covering and penalty bids, settlement, post-pricing reporting, lock-up enforcement |
| 5 | Exempt Securities (1933 Act) | The exempt-security categories under the 1933 Act (government, municipal, bank, short-term commercial paper, charitable, etc.) and the conditions for each |
| 6 | Exempt Transactions (1933 Act) | Regulation D safe harbors (limited offering, private placement to accredited investors with and without general solicitation), Regulation A+, intrastate offerings, the resale-of-restricted-securities safe harbor and the institutional-resale safe harbor, Regulation S, the private-placement statutory exemption, and the qualified-purchaser resale exemption |
Why This Chapter Matters
Underwriting is one of the two ways investment-banking representatives generate fees (the other is advisory, covered in Chapter 3). Whether you're working on a $50M IPO, a $500M follow-on, a $10B convertible, or a private institutional-resale bond, the same mechanics govern: registration vs exemption, what can be said during which period, who in the syndicate does what, and how the deal prices and stabilizes.
The exam tests whether you can place an offering on the registration timeline (pre-filing vs waiting vs post-effective), identify the right exemption for a given private placement, name the participants in a syndicate and what each is on the hook for, and walk through what happens after pricing: stabilization, syndicate covering, lock-up expiry, secondary-market trading.
Exam Strategy
At 27% of the exam (20 questions), this chapter rewards mastery of the registration timeline and the exemption categories. Focus on:
- The three periods: pre-filing (no offers, oral or written), waiting (oral offers + red herring + free-writing prospectus + tombstones; no sales), post-effective (offers and sales both allowed, prospectus delivery requirements kick in)
- Forms of prospectus: red herring (preliminary prospectus), final statutory prospectus, free-writing prospectus, tombstone advertisement. Summary prospectuses are a packaged-products construct and not in scope for Series 79
- Shelf and WKSI mechanics: who qualifies as a WKSI ($700M float, etc.), what automatic shelf registration enables, when takedowns can happen, what's filed at takedown vs at shelf
- Commitment types: firm commitment (underwriters bear the risk), best efforts (underwriters are agents with no capital at risk), all-or-none and mini-max contingency mechanics, what triggers escrow refund
- Reg D vs Reg A vs restricted-securities resale vs institutional resale vs Reg S: who can buy, what's the cap, what's the resale restriction, what's filed and when. These distinctions are heavily tested
- Corporate financing rule fee caps: unreasonable compensation, what counts toward the cap, what items are excluded
- Stabilization vs manipulation: passive vs active bids, what disclosures are required, when stabilization must cease