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SIE securities offerings practice questions

Free SIE exam questions on offerings: registering a new issue, the cooling-off period, underwriting commitments, exempt securities and transactions, Rule 144 and IPO rules, with rationales.

Tap an answer to check it, or open "Show the answer and rationale" under each question. Customers in the questions are fictional. Exam practice only, not investment advice.

Question 1 of 20

Who files the registration statement for a new corporate stock offering?

  1. FINRA
  2. The issuer
  3. The transfer agent
  4. The SEC itself
Show the answer and rationale

Answer: B

The issuing company files the registration statement, usually with help from its underwriter and lawyers. FINRA reviews underwriting terms, the transfer agent keeps ownership records, and the SEC reviews rather than files.

📚 Learn it: Filing, Cooling Off and Going Effective

Question 2 of 20

In a mini-max offering, investor funds are held in escrow until:

  1. The issue is fully sold
  2. The minimum amount is sold
  3. The SEC approves the deal
  4. The issuer's stock is listed
Show the answer and rationale

Answer: B

Mini-max deals proceed once the minimum is reached and may sell up to the maximum; until then funds stay in escrow. Requiring full sale describes all-or-none, and the SEC never approves offerings.

📚 Learn it: Syndicates, Spreads and Commitments

Question 3 of 20

A customer buys a newly issued U.S. Treasury note at auction. Why was no SEC registration statement filed?

  1. Treasuries are sold only to banks
  2. The SEC registers them after issue
  3. Federal government securities are exempt
  4. The note matures in under 270 days
Show the answer and rationale

Answer: C

Securities issued or guaranteed by the U.S. government are exempt securities. Individuals can buy at auction, nothing is registered after issue, and Treasury notes mature in more than a year.

📚 Learn it: Securities That Skip SEC Registration

Question 4 of 20

Under Rule 147, an intrastate offering must be sold only to:

  1. Residents of the issuer's state
  2. Qualified institutional buyers
  3. Investors outside the U.S.
  4. Accredited investors nationwide
Show the answer and rationale

Answer: A

Rule 147 and 147A limit sales to in-state residents (or those reasonably believed to be). Accredited-only is 506(c), QIBs are Rule 144A and offshore buyers are Regulation S.

📚 Learn it: Private Placements, Reg A and Friends

Question 5 of 20

Which group is subject to Rule 144 volume limits even after the holding period has ended?

  1. Holders of exempt securities
  2. Holders of commercial paper
  3. Non-affiliates of reporting issuers
  4. Affiliates of the issuer
Show the answer and rationale

Answer: D

Affiliates remain subject to volume limits, manner-of-sale rules and Form 144 when selling. Non-affiliates who have satisfied the holding period face few or no conditions, and exempt securities are outside Rule 144.

📚 Learn it: Rule 144: Selling Restricted and Control Stock

Question 6 of 20

The disclosure document for a new municipal bond issue is the:

  1. Red herring
  2. Official statement
  3. Form 10-K
  4. Registration statement
Show the answer and rationale

Answer: B

Munis are exempt from SEC registration; the issuer prepares an official statement, posted to the MSRB's EMMA system. Registration statements, red herrings and 10-Ks belong to SEC-registered corporate issuers.

📚 Learn it: Hot IPOs, Spinning and Muni Deals

Question 7 of 20

A representative tells a customer, 'The SEC has approved this offering, so it's safe.' This statement is:

  1. Prohibited because the SEC does not approve securities
  2. Required disclosure on the final prospectus
  3. Acceptable if the issue is registered
  4. Acceptable after the effective date
Show the answer and rationale

Answer: A

The SEC reviews disclosure but never approves securities or passes on their merits; claiming otherwise is unlawful. The prospectus actually carries a legend saying the SEC has not approved or disapproved the securities.

📚 Learn it: Filing, Cooling Off and Going Effective

Question 8 of 20

An issue is offered to the public at $20.00 and the issuer receives $18.80 per share. The underwriting spread is:

  1. $1.00
  2. $1.20
  3. $1.80
  4. $0.80
Show the answer and rationale

Answer: B

Spread = public offering price − proceeds to issuer = $20.00 − $18.80 = $1.20. It is shared among the manager's fee, underwriting fee and selling concession.

📚 Learn it: Syndicates, Spreads and Commitments

Question 9 of 20

Insurance products that are exempt from registration under the Securities Act of 1933 include:

  1. Fixed annuities
  2. Variable annuities
  3. Variable life insurance
  4. Variable universal life
Show the answer and rationale

Answer: A

Fixed annuities and traditional insurance policies, issued by state-regulated insurers, are exempt. Variable products shift investment risk to the buyer, making them securities that must be registered.

📚 Learn it: Securities That Skip SEC Registration

Question 10 of 20

Within how many days after the first sale must an issuer file Form D for a Regulation D offering?

  1. 15 days
  2. 10 days
  3. 20 days
  4. 30 days
Show the answer and rationale

Answer: A

Form D is a notice filed with the SEC within 15 days after the first sale. Twenty days is the '33 Act cooling-off period, and 10 and 30 days are not the Form D deadline.

📚 Learn it: Private Placements, Reg A and Friends

Practice 10 more securities offerings questions free →

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Question 11 of 20

When does the Rule 144 holding period for restricted securities begin?

  1. When the issuer files Form D
  2. When the shares are first listed
  3. When the shares are fully paid for
  4. When Form 144 is filed
Show the answer and rationale

Answer: C

The holding period starts when the securities are bought and fully paid for. Form D filing, listing and Form 144 filing do not start the clock.

📚 Learn it: Rule 144: Selling Restricted and Control Stock

Question 12 of 20

Under Rule 5130, an account may still buy a new equity IPO if restricted persons together hold a beneficial interest of no more than:

  1. 10%
  2. 50%
  3. 5%
  4. 25%
Show the answer and rationale

Answer: A

Rule 5130's account-level exemption applies when restricted persons' combined beneficial interest is 10% or less. 25% is the threshold used in Rule 5131's spinning exception, not 5130.

📚 Learn it: Hot IPOs, Spinning and Muni Deals

Question 13 of 20

A preliminary prospectus omits which of the following?

  1. The nature of the business
  2. The use of the proceeds
  3. The risk factors
  4. The final public offering price
Show the answer and rationale

Answer: D

The red herring is issued before the price is set, so it lacks the final offering price (and related figures). It does describe the business, risk factors and use of proceeds.

📚 Learn it: Filing, Cooling Off and Going Effective

Question 14 of 20

Which type of underwriting commitment gives the issuer the most certainty about the money it will raise?

  1. All-or-none
  2. Best efforts
  3. Firm commitment
  4. Mini-max
Show the answer and rationale

Answer: C

Under a firm commitment the underwriters buy the whole issue at a set price, so the issuer knows its proceeds. In best efforts deals, including AON and mini-max, proceeds depend on how much sells.

📚 Learn it: Syndicates, Spreads and Commitments

Question 15 of 20

Which security is exempt from registration under the Securities Act of 1933?

  1. A variable annuity
  2. Shares of a closed-end fund
  3. A state general obligation bond
  4. Common stock of a bank holding company
Show the answer and rationale

Answer: C

Municipal securities, including state GO bonds, are exempt securities. Bank holding company stock, variable annuities and closed-end fund shares must be registered.

📚 Learn it: Securities That Skip SEC Registration

Question 16 of 20

Non-accredited purchasers in a 506(b) offering must be:

  1. Residents of the issuer's state
  2. Qualified institutional buyers
  3. Sophisticated, alone or with a representative
  4. Officers or directors of the issuer
Show the answer and rationale

Answer: C

506(b) non-accredited buyers must have enough financial knowledge to judge the investment, alone or with a purchaser representative. Residency is an intrastate test, QIBs relate to Rule 144A, and insiders are not the requirement.

📚 Learn it: Private Placements, Reg A and Friends

Question 17 of 20

An affiliate must file Form 144 if a planned sale in any 3-month period exceeds:

  1. 1,000 shares or $10,000
  2. 10,000 shares or $100,000
  3. 5,000 shares or $50,000
  4. 50,000 shares or $500,000
Show the answer and rationale

Answer: C

Form 144 is required when sales in a 3-month period exceed 5,000 shares or $50,000 in aggregate value. The other thresholds are not in the rule.

📚 Learn it: Rule 144: Selling Restricted and Control Stock

Question 18 of 20

Which person would be a restricted person under FINRA Rule 5130?

  1. An accountant with no tie to the underwriter
  2. A doctor with a brokerage account
  3. A portfolio manager at an insurance company
  4. A school teacher's adult neighbor
Show the answer and rationale

Answer: C

Portfolio managers for banks, insurers, funds and advisers are restricted persons. A doctor, a neighbor and an accountant with no fiduciary role for the managing underwriter are not.

📚 Learn it: Hot IPOs, Spinning and Muni Deals

Question 19 of 20

Final sales of a registered new issue may begin:

  1. Once indications of interest are collected
  2. When the registration statement is filed
  3. When the red herring is printed
  4. On the effective date
Show the answer and rationale

Answer: D

Sales may be made only once the registration statement becomes effective. Filing starts the cooling-off period, and red herrings and indications of interest are pre-effective tools.

📚 Learn it: Filing, Cooling Off and Going Effective

Question 20 of 20

The portion of the spread paid to the firm that actually sells shares to customers is the:

  1. Managing underwriter's fee
  2. Underwriting fee
  3. Placement fee
  4. Selling concession
Show the answer and rationale

Answer: D

The selling concession goes to whoever sells the shares, syndicate member or selling group member. The manager's fee goes to the lead underwriter and the underwriting fee compensates syndicate members for risk.

📚 Learn it: Syndicates, Spreads and Commitments

Practice 10 more securities offerings questions free →

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