SIE cheat sheetSection 1: Knowledge of Capital Markets (16%)
Types of Offerings
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Initial Public Offering (IPO)
- First time a company sells stock to the public
- Company goes from private → public
- Underwritten by investment bankers
- Requires SEC registration (S-1 filing)
- Quiet period restrictions apply
Secondary Offering / Follow-On
- Company that is ALREADY public issues more shares
- Dilutes existing shareholders
- Still registered with SEC
Private Placement (Reg D)
- Securities sold to accredited investors WITHOUT full SEC registration
- Accredited investors: $200K income ($300K joint) or $1M net worth (excluding primary residence)
- Rule 506(b): up to 35 non-accredited investors, no general solicitation
- Rule 506(c): unlimited accredited only, general solicitation allowed
- Securities are RESTRICTED — can't resell freely (Rule 144 applies)
Regulation A (Reg A+)
- "Mini-IPO" for smaller companies
- Tier 1: up to $20M in 12 months
- Tier 2: up to $75M in 12 months
- Simpler/cheaper than full IPO registration
Regulation CF (Crowdfunding)
- Raise up to $5M in 12 months
- Through registered crowdfunding portal
- Available to general public (non-accredited investors)
Shelf Registration (Rule 415)
- Company pre-registers securities for later sale
- Can sell "off the shelf" when market conditions are favorable
- Good for 3 years
Key facts to memorize
- Accredited investor: $200K income ($300K joint) or $1M net worth (excl. home)
- Reg D 506(b): up to 35 non-accredited, no general solicitation
- Reg D 506(c): accredited only, general solicitation OK
- Reg A+ Tier 2: up to $75M in 12 months
- Reg CF: up to $5M through crowdfunding portal
- Shelf registration (Rule 415): good for 3 years
Mnemonics that stick
- "Reg D = Direct to accredited" — private placement, skip full SEC registration
- "Accredited = $200K income or $1M net worth (excluding house)"
- "Rule 144 = Restricted stock resale rule" — holding period before free resale
- "Shelf = Save it for later" — pre-register, sell when ready
Exam traps
- Private placements (Reg D) are NOT exempt from anti-fraud provisions — only from REGISTRATION
- Net worth for accredited investor excludes PRIMARY RESIDENCE
- Reg D Rule 506(b) allows up to 35 NON-accredited investors — not zero
- Shelf registration is valid for 3 years, not indefinitely
- Secondary offering ≠ secondary market — secondary offering is issuer selling MORE shares
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