Exam 32: Investor Protection,E-Securities Transactions,and Wall Street Reform

John operates a sailboat charter service in the United States Virgin Islands.He currently has a fleet of ten boats and would like to have a larger fleet,but he would have to obtain additional investors in order to do so,which he opposes.John is considering having investors buy sailboats,which he would maintain and operate as part of his charter fleet.He would enter into a contract that would sell the boat to an investor,obligate the investor to pay John a monthly fee for the maintenance of the boat,and share profits between John and the investor.Discuss whether this investment is a security under the Securities Act of 1933.

Even non-employees can violate insider trading rules.

Rule 10b-5 is not restricted to purchases and sales of securities of reporting companies.

The business or party selling securities to the public is called the "issuee."

Violations of Section 12 of the Securities Act of 1933 include selling securities pursuant to an unwarranted exemption and making misrepresentations concerning the offer or sale of securities.

State securities laws are usually applied when smaller companies are issuing securities within that state.

When do registration statements usually become effective?

In 2010,the United States Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act to regulate hedge funds,derivatives,and abusive practices in the securities industry.

Negligence that results in a material misstatement will subject a party to liability under Rule 10b-5 of the Securities Exchange Act of 1934.

The due diligence defense requires that the expert prove that they performed a ________ investigation of the issuer's financial statements.

Companies are covered under the Securities Exchange Act of 1934 only if they are in the process of making new offerings of securities.

What is the general reason for restrictions against insider trading under the Securities Exchange Act of 1934?

The "pre-filing" period ends when the registration statement is filed.

NASDAQ has the largest trading volume of any securities exchange in the world.

Statutory insiders must file reports with the Securities and Exchange Commission disclosing their ownership and trading in the company's securities.

Non-issuers of securities do not have to file a registration statement before reselling securities they have purchased.

A section of the Sarbanes-Oxley Act establishes rules for separating the investment banking and securities advice functions of securities firms,thereby eliminating many conflicts of interest.

Section 12 of the Securities Act of 1933 imposes civil liability on any person who violates the provisions of Section 5 of the Act.

Following the stock market crash in 1939,Congress enacted a series of statutes designed to regulate securities markets.

Under the Securities Act of 1933,which of the following is true about activities of the issuer during the "waiting period?"