Series 6

AAA

Marketing and Sales Presentations - Securities Registration

Any security that is traded on a national securities exchange must be registered with the SEC. The application for listing on the exchange will include the following information:

  • The nature of the business, its organization and financial structure
  • The terms, provisions, rights and privileges of the different classes of securities offered
  • The terms under which securities have been offered over the preceding three years
  • The directors, officers, underwriters and anyone holding more than 10% of the issuer's equity securities, along with their salaries, their interest in the securities and any contracts they hold with the issuing company
  • The salaries of other senior persons receiving more than $20,000 annually
  • Any bonus or profit-sharing arrangements

Rules Relating to Prospecting and Marketing
Within this section we will focus on Sections 5, 12, 17 and 23 under the Securities Act of 1933. These Sections apply to prospecting and marketing.

Section 5: Prohibition Relating to Interstate Commerce and the Mails

  1. Sale or delivery after sale of unregistered securities
    Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly--

    1. to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell such security through the use or medium of any prospectus or otherwise; or

    2. to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale.

  2. Necessity of prospectus meeting requirements of section 10
    It shall be unlawful for any person, directly or indirectly--

    1. to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to carry or transmit any prospectus relating to any security with respect to which a registration statement has been filed under this title, unless such prospectus meets the requirements of section 10; or

    2. to carry or cause to be carried through the mails or in interstate commerce any such security for the purpose of sale or for delivery after sale, unless accompanied or preceded by a prospectus that meets the requirements of subsection (a) of section 10.

Section 12: Civil Liabilities Arising in Connection with Prospectuses and Communications

  1. In general, any person who offers or sells a security in violation of section 5, or offers or sells a security (whether or not exempted by the provisions of section 3, other than paragraphs (2) and (14) of subsection (a) of said section), by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable, subject to subsection (b), to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.

  2. Loss causation
    In an action described in subsection (a)(2), if the person who offered or sold such security proves that any portion or all of the amount recoverable under subsection (a)(2) represents other than the depreciation in value of the subject security resulting from such part of the prospectus or oral communication, with respect to which the liability of that person is asserted, not being true or omitting to state a material fact required to be stated therein or necessary to make the statement not misleading, then such portion or amount, as the case may be, shall not be recoverable.

Section 17: Fraudulent Interstate Transactions

  1. Use of interstate commerce for purpose of fraud or deceit
    It shall be unlawful for any person in the offer or sale of any securities or any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act [15 USCS § 78c note]) by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly--

    1. to employ any device, scheme, or artifice to defraud, or

    2. to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

    3. to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

  2. Use of interstate commerce for purpose of offering for sale
    It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.

Section 23: Unlawful Representations
Neither the fact that the registration statement for a security has been filed or is in effect nor the fact that a stop order is not in effect with respect thereto shall be deemed a finding by the Commission that the registration statement is true and accurate on its face or that it does not contain an untrue statement of fact or omit to state a material fact, or be held to mean that the Commission has in any way passed upon the merits of, or given approval to, such security. It shall be unlawful to make, or cause to be made to any prospective purchaser any representation contrary to the foregoing provisions of this section.

FINRA Conduct Rule 2210
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