February 2017 LACBA MCLE Test and Answer Sheet

Test No. 265: Ready Capital

To access the article related to this test, please click here.
Instructions for Obtaining MCLE Credit

The Los Angeles County Bar Association certifies that this activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1 hour. To apply for credit, please follow the instructions.

1. Study the CLE article.

2. Answer the test questions by marking the appropriate boxes. Each question has only one answer.

3. Photocopies of this answer sheet may be submitted; however, this form should not be enlarged or reduced. Mail the answer sheet and the $20 testing fee ($25 for non-LACBA members) to:

Los Angeles Lawyer
P.O. Box 55020
Los Angeles, CA 90055

Make checks payable to Los Angeles Lawyer.

4. You can also fill in the test form and submit it directly to LACBA by clicking "Submit." To submit your test answers online you will need to pay by credit card. After submitting your answers you will be presented with a screen requesting payment information. This information will be submitted in a secure mode which will allow you to safely transmit your credit card number over the Internet. If you prefer not to pay by credit card, please print this answer sheet and submit your responses by regular mail.

5. Within six weeks, Los Angeles Lawyer will return your test with the correct answers, a rationale for the correct answers, and a certificate verifying the CLE credit you earned through this self-study activity.

6. For future reference, please retain the CLE test materials returned to you.


Test Sheet

Mark your answers to the test by clicking next to your choice.  All questions must be answered.  Each question has only one answer. This test is worth 1 hour of credit.*

1. An individual accredited investor must have an annual income of $200,000 in each of the two most recent years (or $300,000 joint income) and have a net worth in excess of $1 million, excluding home equity.

2. There is no limit on the amount of securities that may be sold in an offering pursuant to Rule 506 of Regulation D.

3. A company may not sell securities to a nonaccredited investor pursuant to Rule 506(b) of Regulation D.

4. Today, 99 percent of all private offerings under Regulation D are conducted pursuant to Rule 506.

5. Securities offerings pursuant to Regulation A preempt state securities “blue sky” laws.

6. Investors in securities offerings pursuant to Regulation CF and Regulation A are not required to satisfy any sophistication test.

7. Companies that conduct securities offerings under Tier 1 of Regulation A are subject to ongoing reporting requirements.

8. Equity crowdfunding offerings under Regulation CF (Title III of the JOBS Act) must be conducted using a funding portal regulated by the Financial Industry Regulatory Authority (FINRA).

9. There is no requirement that an investor in an equity crowdfunding offering under Regulation CF be accredited or sophisticated.

10. If either an investor’s annual income or net worth is $1 million or more, there is no limit on the amount that the investor may invest in all crowdfunding offerings under Regulation CF in a 12-month period.

11. An issuer of securities in a crowdfunding offering under Regulation CF must file with the SEC an offering disclosure statement on Form C.

12. A securities offering under Regulation CF may not commence until the SEC qualifies the Form C.

13. There are no restrictions on communications or advertising securities offerings under Regulation CF.

14. Before the JOBS Act, public offerings to unsophisticated investors required SEC registration or qualification.

15. The so-called “finder’s exception” to broker-dealer licensure requirements allows an unlicensed person to receive transaction-based compensation in connection with the sale of a security, provided that the unlicensed finder does not negotiate the terms of the investment.

16. Under the “issuer exemption” safe harbor Rule 3a4-1 an employee who engages in the sale of the employer’s securities may receive a cash performance bonus based on the amount of securities sold.

17. Paying an unlicensed broker to solicit investors exposes an issuer to potential significant civil liability.

18. The investor plaintiff bears the burden of proof to establish that the company defendant violated the requirements of the exemption from registration.

19. Failure to satisfy the requirements of Rule 506(c), Regulation A or Regulation CF will result in loss of the exemption from registration and give rise to liability under Section 12(a)(1) only if the investor plaintiff proves that the company defendant acted with scienter or negligently.

20. In California, attorneys rendering securities law advice are held to a higher standard of care in legal malpractice actions.


Before clicking the Submit button, please verify that all questions have been answered. An error message will appear if not all questions are answered.

* The Los Angeles County Bar Association has been approved as a continuing legal education provider of Minimum Continuing Legal Education credit by the State Bar of California. This self-assessment activity will qualify for Minimum Continuing Legal Education credit by the State Bar of California in the amount of one hour.