Series 63 practice questionmediumEscrow and Consideration
Which of the following is LEAST likely to result in an escrow requirement by a state Administrator for securities issued in a registration by qualification?
- AConsideration was received in the form of equipment from a company officer.
- BThe shares were issued to an underwriter for cash at market value.✓ Correct answer
- CThe securities were issued to promoters prior to the public offering for services rendered.
- DThe administrator suspects that property for shares was overvalued.
Explanation
Why B — The shares were issued to an underwriter for cash at market value.
Receiving cash at market value from an underwriter does not usually trigger an escrow. Non-cash consideration or related party transactions often do (USA Sec. 305).
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