Securities Act 1933
A broker-dealer may accept payment for a new issue from a new customer when:
No money can change hands until registration is EFFECTIVE. Cooling-off = indications of interest only.
Complete Analysis & Legal Rationale
Broker-dealers cannot accept payment for new issues until the SEC declares the registration statement effective. During the cooling-off period, indications of interest may be collected but no sales or payment can occur. The red herring (preliminary prospectus) is used to gauge interest but does not authorize sales.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Matches the verified teaching point in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.