Exam 17: Investor Protection, E-Securities, and Wall Street Reform

An issuer who plans on raising $1 million or less from the public must answer the questions on Form U-7, which then becomes the offering circular that must be given to prospective investors.

A prospectus is a written disclosure provided with the registration statement that helps the SEC to evaluate the financial risk of an investment.

The ________ coordinates state securities laws with federal securities laws.

According to Regulation A, securities of up to $5 million can only be sold to accredited investors.

Liability under Section 11 is imposed on issuers who are negligent in not discovering fraud in their security offerings.

The Securities Act of 1933 provides a(n)________ exemption that permits local businesses to obtain from local investors capital to be used in the local economy without the need to register with the SEC.

How does Section 16(b)of the Securities Exchange Act of 1934 protect the interests of a corporation? Explain with an example.

Which of the following is true of Section 11 of the Securities Act of 1933?

Interests in oil, gas, and mineral rights are classified as ________.

Which of the following is an example of exempt securities?

The courts apply the Howey test in determining whether an arrangement is a(n)________ and therefore a security.

The courts apply the ________ in determining whether an arrangement is an investment contract.

It is legal for a company employee to make a profit by personally purchasing shares of the corporation prior to public release of favorable information.

A tipper cannot be held liable for the profits made by the tippee.

The Dodd-Frank Wall Street Reform and Consumer Protection Act imposes regulations on ________.

An investor who has purchased an unregistered security can rescind their purchase, but not recover damages.

Utilities Ltd. decided to go public by an initial public offering. It sold securities, some of which were bought by James Jefferson. Six months later, Mr. Jefferson sold the Utilities shares he had purchased to Martha Graham and Mark Franco. Two years later, Mr. Jefferson bought back the Utilities shares from Ms. Graham and Mr. Franco and made a profit out of both transactions. Who is the issuer in this scenario?

A(n)________ issued by the SEC indicates that a defendant agrees not to violate securities laws in the future but does not admit to having violated securities laws in the past.

Continuous reporting to investors and the SEC is a requirement imposed by the Securities Act of 1933.

Only an established company is permitted to sell new securities to the public.