Discuss Finra Series-7 Exam Topic 1 Question 127

Bubba has been classified as a restricted person according to Rule 2790. He may purchase equity securities of an IPO except:

Ato purchase securities to avoid dilution

Bwhen the new issue of securities is purchased pursuant to a stand-by agreement

Cwhen the transaction is exempt by an order of the FINRA

Dwhen the new issue of securities is purchased pursuant to a best effort basis

Suggested Answer: D

when the new issue of securities is purchased pursuant to a best effort basis. All the other choices are allowable under the rule ''except'' this one.

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19 comments · newest first

Dalene 1 month ago

Let's hope we all get it right!

Malissa 1 month ago

Same here. D feels safest.

Beula 2 months ago

C is possible, but I still lean towards D.

Skye 2 months ago

What about C? Exemptions can be confusing.

Dalene 2 months ago

True, D is more clear-cut.

Malissa 2 months ago

Exactly! But it doesn't mean he can do it.

Beula 2 months ago

But A is about avoiding dilution, right?

Skye 2 months ago

I feel like A could be a valid option too.

Dalene 3 months ago

I think it's D. Best effort basis is not allowed.

Malissa 3 months ago

This question is tricky!

Tom 3 months ago

Not sure about that, seems like a loophole waiting to be exploited.

Wilbert 3 months ago

I think it’s only under certain conditions, like the stand-by agreement.

Susana 3 months ago

Wait, can he really buy to avoid dilution? Sounds sketchy.

Francoise 3 months ago

Totally agree, Rule 2790 is pretty clear on that!

Kendra 4 months ago

A restricted person can't buy in an IPO, except in specific cases.

Yuonne 4 months ago

I recall that Rule 2790 has a lot of nuances. I think the answer could be C, but I need to double-check what qualifies as an exemption.

Latanya 4 months ago

I’m a bit confused about the stand-by agreement. Is that considered an exception for restricted persons?

Nydia 4 months ago

This question reminds me of a practice question we did on IPO restrictions. I feel like option D might be the right answer, but I could be wrong.

Ngoc 4 months ago

I think I remember that restricted persons have specific limitations, but I'm not entirely sure about the exceptions.

Finra Series-7 Exam - Topic 1 Question 127 Discussion