Question

How are the securities and exchange commission’s regulation S and Rule 144A similar?

            Both allow firms to raise capital without registering with the SEC if certain conditions are met.

            Both are intended to increase transparency of financial markets

            Both use incentives and penalties to ensure fair dealing between large financial I institutions and small investors

            Both encourage specialized training by individuals designated to sell securities

Answer 1

Answer) Both allow firms to raise capital without registering with the SEC if certain conditions are met

Explanation:

Rule 144A and reg. S of the Securities Act (“Rule 144A) is a safe harbor provision, which provides an exemption from registration requirment of the securities act. The securities eligible for resale under Rule 144A are securities of U.S. and foreign issuers that are not listed on a U.S. securities exchange or quoted on a U.S. automated inter-dealer quotation system. The exemption applies to re-sales of securities and therefore any person other than an issuer may rely on Rule 144A protection.

The basic difference between Rule 144A and Regulation S is that securities under Rule 144A can only be held by QIBs, whereas securities under Regulation S can be held by any non-U.S. holders