General Securities Representative (Series 7) Practice Exam

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When are buyers allowed to resell securities from a Rule 147 offering?

Immediately after purchase
After holding for 6 months
After 9 months from the last sale by the issuer
After obtaining a waiver

The correct answer is: After 9 months from the last sale by the issuer

In a Rule 147 offering, which is designed for intrastate offerings, buyers are restricted in their ability to resell the securities to ensure that the offering is primarily aimed at residents of the state where the issuer is located. According to the guidelines of Rule 147, securities acquired in this context cannot be sold to non-residents for a period of nine months following the last sale by the issuer. This provision is critical because it helps maintain the local character of the offering by preventing out-of-state investors from rapidly flipping the securities. The nine-month holding period requirement encourages buyers to invest more seriously, as they must hold the securities for that duration before they can offer them for resale outside the state. With the understanding of the intrinsic purpose of Rule 147 and the regulations surrounding it, the correct answer reflects the necessary compliance with the holding period mandated by the SEC. This provision is particularly important for maintaining the integrity of intrastate offerings and ensuring that they meet their intended purpose of benefiting local businesses and investors.