Practice Quiz

FINRA Series 7 Exam Prep

Category - Series 7

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The registration requirements of the federal securities acts are intended to protect the public interest by providing for a prospectus on new issues and its review by the SEC. Which of the following is the true of this process?
  1. It provides the SEC with adequate information on which to base approval for new issues
  2. It does not imply SEC approval of the issue
  3. It guarantees purchasers against an untrue statement of material fact or an omission of material fact
  4. It relieves participating underwriters from any further responsibility for checking essential facts before recommending purchase to the customers
Explanation
Answer: A - It does not imply SEC approval of the issue. The SEC does not approval an issue. It only attempts to see that sufficient information has been provided from which a proper investment determination may be made.
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