General Securities Sales Supervisor (Series10) Practice Exam

What does SEC Rule 415 allow established issuers to do?

1. File a new registration for each offering

2. File a blanket registration covering a 3-year period

3. Register for a 5-year shelf period

4. Issue securities without any registration

The correct answer is: File a blanket registration covering a 3-year period

SEC Rule 415, often referred to as the "shelf registration" rule, allows established issuers to file a blanket registration statement covering a three-year period. This provision enables companies to register a large amount of securities in advance and then sell them to the public over time, as market conditions are favorable. By doing this, issuers can take advantage of favorable market conditions without needing to register each individual offering. This flexibility supports efficient capital raising and allows companies to respond swiftly to market opportunities. The focus on a three-year period is essential, as it sets a specific timeframe within which these offerings must take place, ensuring that the registered securities remain relevant and that any new information or developments about the issuer can be incorporated before they are sold. This rule is particularly beneficial for established companies with proven track records, as it streamlines their ability to raise funds while minimizing regulatory hurdles. In contrast, other options do not accurately reflect the provisions of SEC Rule 415. Options relating to filing new registrations for each offering or issuing securities without registration do not reflect the strategic planning and efficiency that the rule is designed to provide. Similarly, the idea of a longer shelf period, such as five years, is not supported by this specific rule.