Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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True or False: If a registration statement has not been filed with the SEC, BDs may still discuss new issue information.

True
False
Only under strict conditions
Only if information is publicly available

The correct answer is: False

In the context of securities regulation, broker-dealers (BDs) are prohibited from discussing new issue information when a registration statement has not been filed with the SEC. The Securities Act of 1933 requires that any securities offered for sale to the public must have a registration statement filed and declared effective by the SEC before any offers to sell can be made. Until the registration statement is effective, BDs cannot legally provide information about the new issue because it essentially constitutes an unauthorized offering. This regulation helps to ensure that investors are protected and have access to the necessary information to make informed decisions about their investments. The filing of a registration statement includes various disclosures that must be provided to the public, thus maintaining a level of transparency and trust in the market. Options suggesting that BDs may discuss new issue information under certain conditions or if the information is publicly available misinterpret the regulatory framework. The prohibition is clear-cut, aligning with the principle of protecting the integrity of the market and the interests of investors.