Future Business Leaders of America (FBLA) Securities and Investments Practice Test

What is the effective date in securities issuance?

1. The date the registration statement is filed

2. The date SEC approves the registration

3. The date established by SEC for selling securities

4. The date when a company's stock becomes publicly traded

The correct answer is: The date established by SEC for selling securities

The effective date in securities issuance refers to the specific date set by the Securities and Exchange Commission (SEC) when a company's securities are allowed to be sold to the public. This date is crucial because it marks the point at which all the necessary regulatory requirements have been satisfied, allowing the company to proceed with the sale of its securities. Prior to the effective date, the registration statement must be filed, and the SEC typically reviews it to ensure compliance with applicable laws and regulations. Although the registration statement is filed before any sales can occur, it is not the date that grants permission to sell the securities. Similarly, while the SEC may approve the registration statement, this approval does not directly equate to an effective date for sales; it is merely part of the process. Only once the SEC establishes the effective date can the securities be offered and sold to investors. Therefore, this date is essential for both the issuer and potential investors, as it indicates when trading can officially begin and the securities can enter the market.