Series 79 practice questioneasyIPO Process
Which entity is primarily responsible for declaring an IPO registration statement effective?
- AFINRA
- BThe lead underwriter
- CThe Securities and Exchange Commission (SEC)✓ Correct answer
- DThe stock exchange on which shares will be listed
Explanation
Why C — The Securities and Exchange Commission (SEC)
The SEC is responsible for reviewing the registration statement and declaring it effective, which allows the sale of securities to proceed. The SEC's Division of Corporation Finance reviews the filing for compliance with disclosure requirements. While FINRA reviews the underwriting compensation and arrangements, and the exchange approves listing, only the SEC can declare the registration statement effective.
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