Series 79 practice questionmediumRegulation S
Under Regulation S, what is the distribution compliance period for equity securities of a U.S. domestic issuer?
- A40 days
- B6 months
- C1 year✓ Correct answer
- DNo compliance period is required
Explanation
Why C — 1 year
For equity securities of U.S. domestic issuers (Category 3 under Regulation S), the distribution compliance period is one year. During this period, the securities cannot be sold to U.S. persons, and various safeguards must be in place, including legends on the securities, stop transfer instructions, and purchaser certifications. The longer compliance period for domestic equity reflects the SEC's concern about securities flowing back into the U.S. market shortly after being sold offshore to circumvent registration requirements.
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