Question 1

"Insider trading" rules pertain to:

Accepted Answer

A) employees. 
B) officers. 
C) directors. 
D) All of these. 
A) employees. 
B) officers. 
C) directors. 
D) All of these.

Question 2

The effective date of a registration statement is the thirtieth day after filing, after which investors can access it using
EDMOND.

Accepted Answer

A) True 
 B)False

Question 3

Registration with the SEC ensures a potential investor as to the financial soundness of the business represented by the stock.

Accepted Answer

A) True 
 B)False

Question 4

The exemption from registration for transactions not involving any public offering is the so-called private placement provision found in Section 4(2) of the Act and SEC Rule:

Accepted Answer

A) 10b-5. 
B) 504. 
C) 505. 
D) 506. 
A) 10b-5. 
B) 504. 
C) 505. 
D) 506.

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

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

Question 7

Atlas Pizza plans to sell $500,000 worth of stock in the next year.This stock will be exempt from registration under Regulation A as long as:

Accepted Answer

A) no more than $5 million worth of stock will be sold in any 12-month period. 
B) fewer than 100 shareholders presently own stock in the business. 
C) the stock is sold only to current shareholders. 
D) All of these. 
A) no more than $5 million worth of stock will be sold in any 12-month period. 
B) fewer than 100 shareholders presently own stock in the business. 
C) the stock is sold only to current shareholders. 
D) All of these.

Question 8

Recovery of damages under Rule 10b-5 requires proof of:

Accepted Answer

A) a purchase and sale of the same securities within six months. 
B) scienter. 
C) negligence. 
D) immateriality of a statement. 
A) a purchase and sale of the same securities within six months. 
B) scienter. 
C) negligence. 
D) immateriality of a statement.

Question 9

Which of the following are exempt transactions for issuers under the 1933 Act?

Accepted Answer

A) Private placements 
B) Limited offers not exceeding $5 million under Role 505 or $1 million under Rule 504 
C) Limited offers solely to accredited investors 
D) All of these. 
A) Private placements 
B) Limited offers not exceeding $5 million under Role 505 or $1 million under Rule 504 
C) Limited offers solely to accredited investors 
D) All of these.

Question 10

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 11

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power:

Accepted Answer

A) to issue cease-and-desist orders. 
B) to impose civil penalties up to $1,000,000. 
C) to bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D) All of these. 
A) to issue cease-and-desist orders. 
B) to impose civil penalties up to $1,000,000. 
C) to bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D) All of these.

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 profits realized for violation of Rule 16(b) are given directly to the shareholders as a penalty to the corporation.

Accepted Answer

A) True 
 B)False

Question 15

The rule that prohibits the solicitation of a proxy unless each person solicited has been furnished with a written proxy statement containing specified information is Rule:

Accepted Answer

A) 10b-5. 
B) 16(b). 
C) 14a-3. 
D) 505. 
A) 10b-5. 
B) 16(b). 
C) 14a-3. 
D) 505.

Question 16

Every registration filed with the SEC is held in confidence until the business permits disclosure.

Accepted Answer

A) True 
 B)False

Question 17

A defense to an action based on untrue statements contained in a registration statement is:

Accepted Answer

A) innocent mistake. 
B) due diligence. 
C) constructive disclosure. 
D) reasonable diligence. 
A) innocent mistake. 
B) due diligence. 
C) constructive disclosure. 
D) reasonable diligence.

Question 18

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a piece of her profits if they will each invest $2,000.Is the investment a "security"?

Accepted Answer

A) Yes, since Marge will do all the work. 
B) Yes, because her neighbors will have a security interest in the jelly. 
C) No, since the neighbors are putting no effort into it. 
D) No, because Marge is not issuing stock certificates. 
A) Yes, since Marge will do all the work. 
B) Yes, because her neighbors will have a security interest in the jelly. 
C) No, since the neighbors are putting no effort into it. 
D) No, because Marge is not issuing stock certificates.

Question 19

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 20

Under the 1934 Act:

Accepted Answer

A) criminal sanctions may be imposed on any person who willfully violates any provision of the Act (except the antibribery provision) or the SEC rules promulgated pursuant to the Act. 
B) criminal sanctions may not be imposed. 
C) conviction of an individual may result in imprisonment for up to 25 years. 
D) a person who proves he had no knowledge of the rule is still subject to imprisonment. 
A) criminal sanctions may be imposed on any person who willfully violates any provision of the Act (except the antibribery provision) or the SEC rules promulgated pursuant to the Act. 
B) criminal sanctions may not be imposed. 
C) conviction of an individual may result in imprisonment for up to 25 years. 
D) a person who proves he had no knowledge of the rule is still subject to imprisonment.

Exam 43: Securities Regulation

"Insider trading" rules pertain to:

The effective date of a registration statement is the thirtieth day after filing, after which investors can access it using EDMOND.

Registration with the SEC ensures a potential investor as to the financial soundness of the business represented by the stock.

The exemption from registration for transactions not involving any public offering is the so-called private placement provision found in Section 4(2) of the Act and SEC Rule:

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

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.

Atlas Pizza plans to sell $500,000 worth of stock in the next year.This stock will be exempt from registration under Regulation A as long as:

Recovery of damages under Rule 10b-5 requires proof of:

Which of the following are exempt transactions for issuers under the 1933 Act?

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 Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power:

The Wall Street Reform and Consumer Protection Act of 2010:

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

The profits realized for violation of Rule 16(b) are given directly to the shareholders as a penalty to the corporation.

The rule that prohibits the solicitation of a proxy unless each person solicited has been furnished with a written proxy statement containing specified information is Rule:

Every registration filed with the SEC is held in confidence until the business permits disclosure.

A defense to an action based on untrue statements contained in a registration statement is:

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a piece of her profits if they will each invest $2,000.Is the investment a "security"?

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

Under the 1934 Act:

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.