Question 1

The 1933 Act imposes only civil, not criminal, sanctions for violation of its provisions.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is TRUE regarding the Foreign Corrupt Practices Act of 1977?

Accepted Answer

A)  It applies only to corporations whose securities are registered under the Securities Exchange Act of 1934. 
B)  It applies only to corporations engaged in foreign commerce. 
C)  The Act makes it illegal to bribe foreign officials to obtain business. 
D)  All of these are correct. 
A)  It applies only to corporations whose securities are registered under the Securities Exchange Act of 1934. 
B)  It applies only to corporations engaged in foreign commerce. 
C)  The Act makes it illegal to bribe foreign officials to obtain business. 
D)  All of these are correct.

Question 3

Shelf registrations allow issuers to respond more quickly to market conditions, but the provision allowing it does not apply to all companies.

Accepted Answer

A) True 
 B)False

Question 4

The agency responsible for enforcing the federal securities laws is the:

Accepted Answer

A)  FTC. 
B)  SEC. 
C)  Commerce Department. 
D)  EEOC. 
A)  FTC. 
B)  SEC. 
C)  Commerce Department. 
D)  EEOC.

Question 5

Insiders may refrain from trading on inside information rather than disclose it to avoid liability under Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 6

The Securities and Exchange Commission can seek civil injunctions and recommend that the Justice Department bring criminal prosecution against violators of federal securities laws.

Accepted Answer

A) True 
 B)False

Question 7

In 2009, Congress enacted the Investor Protection and Securities Reform Act, which imposes new corporate governance and investor protection rules on privately and publicly held companies.

Accepted Answer

A) True 
 B)False

Question 8

The SEC may not advance the effective date of a registration statement.

Accepted Answer

A) True 
 B)False

Question 9

Under the antifraud provisions of the securities acts, as long as the falsity is not contained in the prospectus, there is no liability where there is a registered security.

Accepted Answer

A) True 
 B)False

Question 10

Hugo wishes to raise money for his restaurant. He offers to sell stock to his brothers, sisters, aunts, uncles, and cousins. The offering is made by telephone to each of the investors and amounts to a stock offering in the dollar amount of $1,500,000. The offering is made to a total of 38 family members and no notice is given to the SEC. Is this a permissible offering under the federal securities laws? Explain.

Accepted Answer

Hugo would probably be able to qualify f

Question 11

The 1934 Securities Exchange Act requires certain disclosure during a "tender offer." Which of the following best describes this requirement?

Accepted Answer

A)  Whenever stock is acquired with intent to effect a takeover 
B)  Whenever an offer for more than 5 percent of a class of registered equity securities is made 
C)  Whenever 10 percent of a target corporation's stock is acquired 
D)  Whenever the acquiring company acquires a "controlling interest" in the target 
A)  Whenever stock is acquired with intent to effect a takeover 
B)  Whenever an offer for more than 5 percent of a class of registered equity securities is made 
C)  Whenever 10 percent of a target corporation's stock is acquired 
D)  Whenever the acquiring company acquires a "controlling interest" in the target

Question 12

The Wall Street Reform and Consumer Protection Act of 2010:

Accepted Answer

A)  removes the SEC's power to bring enforcement actions under the 1933 Act against aiders and abettors. 
B)  amends the 1933 and 1934 Acts to allow recklessness as well as knowledge to satisfy the mental state required for the SEC to bring aiding and abetting cases. 
C)  amends the 1933 and 1934 Acts to allow negligence to satisfy the mental state required for the SEC to bring aiding and abetting cases. 
D)  sets national standards for securities class action lawsuits involving nationally traded securities. 
A)  removes the SEC's power to bring enforcement actions under the 1933 Act against aiders and abettors. 
B)  amends the 1933 and 1934 Acts to allow recklessness as well as knowledge to satisfy the mental state required for the SEC to bring aiding and abetting cases. 
C)  amends the 1933 and 1934 Acts to allow negligence to satisfy the mental state required for the SEC to bring aiding and abetting cases. 
D)  sets national standards for securities class action lawsuits involving nationally traded securities.

Question 13

Which of the following are basic objectives of the 1933 Securities Act?

Accepted Answer

A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To prohibit misrepresentation, deceit, and other fraudulent acts and unfair practices in the sale of securities generally, whether or not they are required to be registered. 
C)  Both of these. 
D)  None of these. 
A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To prohibit misrepresentation, deceit, and other fraudulent acts and unfair practices in the sale of securities generally, whether or not they are required to be registered. 
C)  Both of these. 
D)  None of these.

Question 14

The antifraud provisions of the 1933 Act pertain to both unregistered and registered securities.

Accepted Answer

A) True 
 B)False

Question 15

If a lawyer were being held liable for a misstatement in a registration statement, her defense(s) would be:

Accepted Answer

A)  she was only following directions. 
B)  she had reasonable grounds to believe, and did believe, her information was true. 
C)  she was under duress of a threat of loss of her job if she did not agree with the statement. 
D)  None of these would be valid defenses. 
A)  she was only following directions. 
B)  she had reasonable grounds to believe, and did believe, her information was true. 
C)  she was under duress of a threat of loss of her job if she did not agree with the statement. 
D)  None of these would be valid defenses.

Question 16

The 2008 amendments to the SEC rules define a small business issuer as a noninvestment company whose annual revenues total less than $1 million.

Accepted Answer

A) True 
 B)False

Question 17

The Securities Act of 1933 has two basic objectives, one of which is to:

Accepted Answer

A)  extend protection to investors trading in securities that are already issued and outstanding. 
B)  grant the SEC power to impose administrative, civil penalties up to $500,000. 
C)  regulate disclosure requirements on publicly held corporations. 
D)  prohibit misrepresentation, deceit, and other fraudulent acts and practices in the sale of securities generally, whether or not they are required to be registered. 
A)  extend protection to investors trading in securities that are already issued and outstanding. 
B)  grant the SEC power to impose administrative, civil penalties up to $500,000. 
C)  regulate disclosure requirements on publicly held corporations. 
D)  prohibit misrepresentation, deceit, and other fraudulent acts and practices in the sale of securities generally, whether or not they are required to be registered.

Question 18

A securities issuer that has reported continuously under the 1934 Act for at least three years is a(n):

Accepted Answer

A)  well-known seasoned issuer. 
B)  seasoned issuer. 
C)  unseasoned issuer. 
D)  None of these. 
A)  well-known seasoned issuer. 
B)  seasoned issuer. 
C)  unseasoned issuer. 
D)  None of these.

Question 19

The antifraud provisions of the 1934 Act would prohibit which of the following?

Accepted Answer

A)  Lying about the value of the firm's assets to sell stock 
B)  Disclosing that the firm has discovered oil on its property in order to sell stock 
C)  Telling about the bad health of the CEO in a transaction to purchase stock 
D)  Not disclosing the salaries of secretaries of a large firm whose stock is being sold 
A)  Lying about the value of the firm's assets to sell stock 
B)  Disclosing that the firm has discovered oil on its property in order to sell stock 
C)  Telling about the bad health of the CEO in a transaction to purchase stock 
D)  Not disclosing the salaries of secretaries of a large firm whose stock is being sold

Question 20

In an election of directors, solicitations of proxies by a person other than the issuer must include an annual report with a written proxy statement.

Accepted Answer

A) True 
 B)False

Exam 43: Securities Regulation

The 1933 Act imposes only civil, not criminal, sanctions for violation of its provisions.

Which of the following is TRUE regarding the Foreign Corrupt Practices Act of 1977?

Shelf registrations allow issuers to respond more quickly to market conditions, but the provision allowing it does not apply to all companies.

The agency responsible for enforcing the federal securities laws is the:

Insiders may refrain from trading on inside information rather than disclose it to avoid liability under Rule 10b-5.

The Securities and Exchange Commission can seek civil injunctions and recommend that the Justice Department bring criminal prosecution against violators of federal securities laws.

In 2009, Congress enacted the Investor Protection and Securities Reform Act, which imposes new corporate governance and investor protection rules on privately and publicly held companies.

The SEC may not advance the effective date of a registration statement.

Under the antifraud provisions of the securities acts, as long as the falsity is not contained in the prospectus, there is no liability where there is a registered security.

The 1934 Securities Exchange Act requires certain disclosure during a "tender offer." Which of the following best describes this requirement?

The Wall Street Reform and Consumer Protection Act of 2010:

Which of the following are basic objectives of the 1933 Securities Act?

The antifraud provisions of the 1933 Act pertain to both unregistered and registered securities.

If a lawyer were being held liable for a misstatement in a registration statement, her defense(s) would be:

The 2008 amendments to the SEC rules define a small business issuer as a noninvestment company whose annual revenues total less than $1 million.

The Securities Act of 1933 has two basic objectives, one of which is to:

A securities issuer that has reported continuously under the 1934 Act for at least three years is a(n):

The antifraud provisions of the 1934 Act would prohibit which of the following?

In an election of directors, solicitations of proxies by a person other than the issuer must include an annual report with a written proxy statement.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

the Legal Environment of Business

Contracts

Agency

Sales

Negotiable Instruments

Unincorporated Business Associations

Corporations

Debtor and Creditor Relations

Regulation of Business

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