General Securities Sales Supervisor (Series10) Practice Exam

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Which offering uses an "investment letter" for selling restricted securities?

Rule 144 offering
Rule 147 offering
Regulation D offering
Regulation A offering

The correct answer is: Regulation D offering

The use of an "investment letter" is a common practice in Regulation D offerings, particularly in private placements. An investment letter is a document signed by investors stating that they are purchasing the securities for investment purposes only and not with the intent to resell them immediately. This letter supports the issuer's compliance with the securities regulations, as it helps to ensure that the purchasers understand the nature of restricted securities and the limitations on their transferability. Regulation D provides exemptions from registration for certain types of securities offerings and is primarily used to raise capital from accredited investors. This regulation emphasizes the importance of investor sophistication and provides mechanisms like the investment letter to safeguard both the issuer and the investors by clarifying the restrictions associated with the offered securities.