An institutional broker-dealer is structuring a private placement of restricted corporate debt securities under SEC Rule 144A. The firm is reviewing the profile of an institutional client, Apex Capital Management, an SEC-registered investment adviser managing $120 million in corporate bond portfolios on a discretionary basis for high-net-worth individual clients, none of whom independently qualify as institutional investors. The broker-dealer plans to fill Apex's order by purchasing the debt securities in the market and simultaneously reselling them to Apex with a mark-up in a riskless principal transaction. Which of the following statements correctly identifies the regulatory classification of Apex Capital Management and the operational role capacity of the broker-dealer in this transaction?
- Apex Capital Management qualifies as a Qualified Institutional Buyer (QIB) because it manages at least $100 million in non-affiliated securities on a discretionary basis, while the broker-dealer operates in a dealer (principal) capacity.Cevap
- BApex Capital Management fails to qualify as a Qualified Institutional Buyer because the underlying discretionary account owners are retail clients who do not individually meet QIB net worth thresholds, though Apex qualifies as an Accredited Investor.
- CApex Capital Management qualifies as a Qualified Institutional Buyer, while the broker-dealer operates in a broker (agent) capacity because a riskless principal transaction requires charging a commission rather than taking an inventory position.
- DApex Capital Management requires FINRA authorization to be designated as a Qualified Institutional Buyer, while the SEC directly enforces clearance and trade netting for the transaction.