Question 1

If Terry makes tender offer to the owners of Pizza Village registered stock, he must file a statement with the SEC if he:

Accepted Answer

A) owns 1% of Pizza Village stock. 
B) will, after the acquisition, own 5% of all Pizza Village stock. 
C) will, after the acquisition, own more than 5% of one class of Pizza Village voting stock. 
D) will own more than half the stock in all classes. 
A) owns 1% of Pizza Village stock. 
B) will, after the acquisition, own 5% of all Pizza Village stock. 
C) will, after the acquisition, own more than 5% of one class of Pizza Village voting stock. 
D) will own more than half the stock in all classes.

Question 2

In 1992, the SEC issued new rules tightening the registration and reporting system for small business issuers, which increase the cost for such issuers wishing to trade their securities publicly.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Under Regulation A, as amended in 1992, an issuer may make offers upon filing the offering statement but may make sales only after the SEC has qualified the statement.

Accepted Answer

A) True 
 B)False

Question 5

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 6

A basic objective of the Securities Act of 1933 is:

Accepted Answer

A) to provide investors with material information concerning securities offered for sale to the public. 
B) to prohibit misrepresentation and other fraudulent acts in the sale of only registered securities. 
C) to provide disclosure requirements on publicly held corporations. 
D) to regulate tender offers and proxy solicitations. 
A) to provide investors with material information concerning securities offered for sale to the public. 
B) to prohibit misrepresentation and other fraudulent acts in the sale of only registered securities. 
C) to provide disclosure requirements on publicly held corporations. 
D) to regulate tender offers and proxy solicitations.

Question 7

If a limited offering of $1.6 million worth of shares is made only to banks, they will not be required to receive any disclosure materials.

Accepted Answer

A) True 
 B)False

Question 8

The Securities and Exchange Commission (SEC) consists of five commissioners.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

The SEC's computer system that performs automated collection, validation, indexing, acceptance, and dissemination of reports required to be filed with the SEC is known as:

Accepted Answer

A) SEC-ELS. 
B) ELMER. 
C) EDGAR. 
D) EDMOND. 
A) SEC-ELS. 
B) ELMER. 
C) EDGAR. 
D) EDMOND.

Question 12

All fifty states have enacted similar statutes regulating tender offers.

Accepted Answer

A) True 
 B)False

Question 13

The Klodhoffer Corporation has assets amounting to $2 million and needs additional capital to finance expansion of its marketing operation.The board of directors decides to promote an issue of $500,000 of common stock in order to raise capital.At the time the stock is issued, Klodhoffer has 250 shareholders owning common stock.If Klodhoffer is to trade the stock over the counter, does it need to register with the SEC?

Accepted Answer

Klodhoffer's issue is exempt under Rule

Question 14

Section 16(b) of the 1934 Securities Exchange Act deals with short-swing profits of "insiders." For purposes of the section, which of the following are not "insiders"?

Accepted Answer

A) Attorneys with access to corporate records 
B) Directors 
C) Officers 
D) 10 percent shareholders 
A) Attorneys with access to corporate records 
B) Directors 
C) Officers 
D) 10 percent shareholders

Question 15

The Foreign Corrupt Practices Act makes it illegal for an American company to pay money to a foreign official to influence a decision of that person in his official capacity.

Accepted Answer

A) True 
 B)False

Question 16

Steve paid $500,000 for the purchase of a "franchise" in a new professional soccer league.The franchise is in the form of a limited partnership under which Steve is not permitted to actively participate in the management of the team.The promoters of the league are to do all of the management and to make all of the decisions regarding that management.Steve will receive 15% of all gate receipts and revenue generated from the sale of licensed items such as jackets and coffee mugs.Is the franchise a security within the meaning of the federal securities laws?

Accepted Answer

The franchise fits the definition of a s

Question 17

The 1933 Securities Act differs from the 1934 Act in that the latter deals with issuing stock and the former has to do with trading stock that has already been issued.

Accepted Answer

A) True 
 B)False

Question 18

"Shelf registrations" have to do with delayed sales of stock.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

Accepted Answer

A) Bonds 
B) Stocks 
C) Investments in limited partnerships 
D) General partnership interests 
A) Bonds 
B) Stocks 
C) Investments in limited partnerships 
D) General partnership interests

Question 20

The rule that prohibits schemes and devices to defraud investors is Rule:

Accepted Answer

A) 504. 
B) 14a-3. 
C) 10b-5. 
D) 16(b). 
A) 504. 
B) 14a-3. 
C) 10b-5. 
D) 16(b).

Exam 43: Securities Regulation

If Terry makes tender offer to the owners of Pizza Village registered stock, he must file a statement with the SEC if he:

In 1992, the SEC issued new rules tightening the registration and reporting system for small business issuers, which increase the cost for such issuers wishing to trade their securities publicly.

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

Under Regulation A, as amended in 1992, an issuer may make offers upon filing the offering statement but may make sales only after the SEC has qualified the statement.

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

A basic objective of the Securities Act of 1933 is:

If a limited offering of $1.6 million worth of shares is made only to banks, they will not be required to receive any disclosure materials.

The Securities and Exchange Commission (SEC) consists of five commissioners.

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

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 SEC's computer system that performs automated collection, validation, indexing, acceptance, and dissemination of reports required to be filed with the SEC is known as:

All fifty states have enacted similar statutes regulating tender offers.

Section 16(b) of the 1934 Securities Exchange Act deals with short-swing profits of "insiders." For purposes of the section, which of the following are not "insiders"?

The Foreign Corrupt Practices Act makes it illegal for an American company to pay money to a foreign official to influence a decision of that person in his official capacity.

The 1933 Securities Act differs from the 1934 Act in that the latter deals with issuing stock and the former has to do with trading stock that has already been issued.

"Shelf registrations" have to do with delayed sales of stock.

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

The rule that prohibits schemes and devices to defraud investors is Rule:

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

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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