GlobeRegulation S allows domestic and foreign issuers to raise capital by selling securities overseas.  These securities do not need to be registered with the SEC under the Securities Act of 1933, and therefore, can lower the regulatory costs and time as compared to traditional registered offerings.  Candidates preparing for FINRA and NASAA license exams should be familiar with:

1)      Issuers: Who can rely on Regulation S

2)      Purchasers: Who can purchase Regulation S securities

3)      Resale provisions: Once Regulation S securities have been purchased, when, if ever, can these securities be resold into the United States

Issuers: Who can rely on Regulation S

  • Allowed:  Both US and Foreign issuers of securities may sell securities in a Regulation S offering.
  • Prohibited: Regulation S is NOT available to mutual funds (open-end investment companies) and unit investment trusts (UITs).

Purchasers: Who can purchase Regulation S securities

  • Only foreign investors are allowed to purchase Regulation S securities.  Regulation S looks to the investor’s address, not their citizenship.  So a U.S. citizen living in France can participate, whereas a French citizen living in the United States could not.

Resale provisions: When, if ever, can Regulation S securities be resold into the United States

Holding period before
securities can be resold to U.S. investors

Holding period before
securities can be sold to
foreign (non-U.S.) investors

(There is no holding period)

Debt securities

40 days

Immediately

Equities of SEC reporting issuers

6 months

Immediately

Equities of non-reporting SEC issuers

12 months

Immediately

 

Knopman Notes
Candidates should be familiar with all of the characteristics associated with the Regulation S offering, including who can rely upon it, who can participate, and how investors can resell their securities both internationally and abroad.

Relevant Exams
Series 7, Series 24, Series 65, Series 66, Series 79

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Written by Dave Meshkov
Dave's mission (and job: Managing Director of Course Design) is to make FINRA exam training engaging, approachable, and dare he even say, enjoyable. Having trained and coached over ten thousand students to exam success he knows how to present complex subjects in memorable and understandable ways. Prior to joining Knopman Marks in 2011, Dave practiced bankruptcy law at Weil, Gotshal & Manages and served as a law clerk in a the Southern District of New York Bankruptcy Court working on the General Motors and Lehman Brothers bankruptcies. Building on his legal expertise and training allows him to keep all our courses updated with the latest legislative and rule-making changes. Dave currently trains for the Securities Industry Essentials (SIE) exam and the Top-Off Series 6, 7, 24, 57, 63, 65, 66, 79, 86, 87, and 99 exams. He also delivers executive one-on-one training and shares his passion for learning outside of work as a ski instructor and yoga teacher. Dave graduated magna cum laude from Fordham Law School, and cum laude with a BA from the University of Pennsylvania.