Series 79 practice questioneasyRule 144A
Rule 144A permits the resale of restricted securities to which type of buyer?
- AQualified institutional buyers (QIBs)✓ Correct answer
- BAny individual investor with a net worth exceeding $1 million
- CAccredited investors as defined under Regulation D
- DBroker-dealers registered with FINRA
Explanation
Why A — Qualified institutional buyers (QIBs)
Rule 144A provides a safe harbor exemption from the registration requirements of the Securities Act for resales of restricted securities to qualified institutional buyers (QIBs). A QIB is generally defined as an institutional investor that owns and invests on a discretionary basis at least $100 million in securities of non-affiliated issuers. For broker-dealers, the threshold is $10 million. This rule created a liquid institutional trading market for unregistered securities, particularly important for private placements and offerings by foreign issuers.
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