Which action can a registered representative (RR) take during the registration process of an underwriting?

Which action can a registered representative (RR) take during the registration process of an underwriting?

• A. Take orders from customers
• B. Accept indications of interest (IOI)
• C. Promise a specific number of shares
• D. Conduct a private transaction

Answer: (B)

A registered representative (RR) can accept indications of interest (IOI) during the registration process of an underwriting because this action allows the representative to gauge market demand for the upcoming security offering without committing to a formal purchase. Accepting IOIs helps both the underwriters and the issuing companies understand the level of investor interest, which can influence pricing and allocation strategies once the security is officially offered for sale. It's important to note that during the registration phase, the RR is not permitted to take actual orders from customers for the securities, as those transactions can only occur after the securities have been officially registered and are publicly available for sale. Similarly, promising a specific number of shares is not allowed since it could mislead potential investors, and the actual allocation will be determined once the offering is finalized. Conducting a private transaction during this period would also be inappropriate, as it could violate regulations related to the timing and disclosure of information about the new security. Therefore, accepting indications of interest is the only action that aligns with regulatory compliance during the underwriting registration process.

A registered representative (RR) can accept indications of interest (IOI) during the registration process of an underwriting because this action allows the representative to gauge market demand for the upcoming security offering without committing to a formal purchase. Accepting IOIs helps both the underwriters and the issuing companies understand the level of investor interest, which can influence pricing and allocation strategies once the security is officially offered for sale.

It's important to note that during the registration phase, the RR is not permitted to take actual orders from customers for the securities, as those transactions can only occur after the securities have been officially registered and are publicly available for sale. Similarly, promising a specific number of shares is not allowed since it could mislead potential investors, and the actual allocation will be determined once the offering is finalized. Conducting a private transaction during this period would also be inappropriate, as it could violate regulations related to the timing and disclosure of information about the new security. Therefore, accepting indications of interest is the only action that aligns with regulatory compliance during the underwriting registration process.