Question 1

Felicity brought a lawsuit under Section 11 of the 1933 Act against Mojo Corp.What will Felicity have to prove in order to prevail?

Accepted Answer

A) Only that she relied on the registration statement 
B) That Mojo was negligent in preparing the registration statement 
C) That there was a material misstatement or omission in the registration statement and she lost money 
D) That Mojo intentionally tried to deceive investors 
A) Only that she relied on the registration statement 
B) That Mojo was negligent in preparing the registration statement 
C) That there was a material misstatement or omission in the registration statement and she lost money 
D) That Mojo intentionally tried to deceive investors C

Question 2

The 1933 Act exempts all but which of the following from its registration requirements?

Accepted Answer

A) Short-term notes 
B) Treasury stock 
C) Government securities 
D) Annuity contracts 
A) Short-term notes 
B) Treasury stock 
C) Government securities 
D) Annuity contracts B

Question 3

Section 16 of the 1934 Act prohibits short-swing trading on the part of officers,directors and controlling shareholders who

Accepted Answer

A) own more than twenty-five percent of the company. 
B) are also on the board of directors of the company. 
C) own more than ten percent of the company. 
D) trade their shares in order to invest in another company. 
A) own more than twenty-five percent of the company. 
B) are also on the board of directors of the company. 
C) own more than ten percent of the company. 
D) trade their shares in order to invest in another company. C

Question 4

The guiding principal of federal securities law is

Accepted Answer

A) to keep investors from making bad investments. 
B) to insure investors have full and accurate information. 
C) to avoid another stock market crash. 
D) to promote the issuance of securities. 
A) to keep investors from making bad investments. 
B) to insure investors have full and accurate information. 
C) to avoid another stock market crash. 
D) to promote the issuance of securities.

Question 5

Which of the following is a characteristic of a restricted security?

Accepted Answer

A) It is purchased in a private offering. 
B) It cannot be sold at any time. 
C) It is subject to reporting requirements. 
D) After six months, it is classified as a control security. 
A) It is purchased in a private offering. 
B) It cannot be sold at any time. 
C) It is subject to reporting requirements. 
D) After six months, it is classified as a control security.

Question 6

The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.

Accepted Answer

A DPO is a direct public offering of sto

Question 7

The 1934 Act requires companies with a class of stock that is publicly traded to make ongoing,regular disclosure with the SEC.

Accepted Answer

A) True 
 B)False

Question 8

To recover for an alleged violation of SEC Rule 10(b)-5,a plaintiff is required to prove reliance on a misstatement or omission relative to the purchase of the security.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following states was not onlythe first state to regulate the sale of securities,but also has the term "blue sky laws" named after it?

Accepted Answer

A) Montana 
B) Kansas 
C) Wyoming 
D) New York 
A) Montana 
B) Kansas 
C) Wyoming 
D) New York

Question 10

Ed,a vice-president of Palmette Products,Inc.,buys 1,000 shares of his company's stock on June 15.His son has medical problems in September,and Ed sells the stock at a profit.Under Section 16,Ed

Accepted Answer

A) must turn over to Palmette any profits he made on the sale. 
B) may keep any profits on the sale since he had a good reason to sell and was not selling in order to manipulate the market. 
C) may keep the profits from the sale as long as he reported his sale to the SEC within two business days. 
D) may keep any profits from the sale if he did not act on secret information when he sold the shares. 
A) must turn over to Palmette any profits he made on the sale. 
B) may keep any profits on the sale since he had a good reason to sell and was not selling in order to manipulate the market. 
C) may keep the profits from the sale as long as he reported his sale to the SEC within two business days. 
D) may keep any profits from the sale if he did not act on secret information when he sold the shares.

Question 11

Discuss the process an issuer follows for either an IPO or a secondary offering.

Accepted Answer

•Underwriting. For a public offer

Question 12

Under what type of securities offering must the issuer determine if the investor is an accredited,sophisticated investor and if the stock is restricted?

Accepted Answer

A) Regulation A offering 
B) Regulation D offering 
C) Public offering 
D) An interstate offering 
A) Regulation A offering 
B) Regulation D offering 
C) Public offering 
D) An interstate offering

Question 13

MegaCorp wishes to sell $25 million of securities.The only investors will be 20 unaccredited investors.Which of the following applies to this offering?

Accepted Answer

A) Rule 504, option 1 of Regulation D of the 1933 Act. 
B) Rule 505 of Regulation D of the 1933 Act. 
C) Rule 506 of Regulation D of the 1933 Act. 
D) Rule 504, option 2 of Regulation D of the 1933 Act. 
A) Rule 504, option 1 of Regulation D of the 1933 Act. 
B) Rule 505 of Regulation D of the 1933 Act. 
C) Rule 506 of Regulation D of the 1933 Act. 
D) Rule 504, option 2 of Regulation D of the 1933 Act.

Question 14

A control security is stock which gives the owner a controlling interest in the company.

Accepted Answer

A) True 
 B)False

Question 15

Any securities offerings covered by the NSMIA must comply with state securities laws.

Accepted Answer

A) True 
 B)False

Question 16

When a stock underwriter acts as the company's agent in selling stock,it is called a

Accepted Answer

A) company underwriting. 
B) express underwriting. 
C) firm commitment underwriting. 
D) best efforts underwriting. 
A) company underwriting. 
B) express underwriting. 
C) firm commitment underwriting. 
D) best efforts underwriting.

Question 17

Under JOBS,privately held companies can sell up to $1 million in securities in any 12-month period if they sell the securities through an approved intermediary.

Accepted Answer

A) True 
 B)False

Question 18

When the underwriter buys stock from the issuer and sells it to the public it is referred to as a?

Accepted Answer

A) best efforts underwriting. 
B) firm commitment underwriting. 
C) secondary underwriting. 
D) public underwriting. 
A) best efforts underwriting. 
B) firm commitment underwriting. 
C) secondary underwriting. 
D) public underwriting.

Question 19

The SEC has enforcement powers,including the power to issue cease and desist orders,to levy fines,and to confiscate profits from illegal transactions.

Accepted Answer

A) True 
 B)False

Question 20

After the SEC completes its review of a preliminary registration statement,it sends the issuer a comment letter setting forth changes that must be made.

Accepted Answer

A) True 
 B)False

Exam 37: Securities Regulation

Felicity brought a lawsuit under Section 11 of the 1933 Act against Mojo Corp.What will Felicity have to prove in order to prevail?

The 1933 Act exempts all but which of the following from its registration requirements?

Section 16 of the 1934 Act prohibits short-swing trading on the part of officers,directors and controlling shareholders who

The guiding principal of federal securities law is

Which of the following is a characteristic of a restricted security?

The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.

The 1934 Act requires companies with a class of stock that is publicly traded to make ongoing,regular disclosure with the SEC.

To recover for an alleged violation of SEC Rule 10(b)-5,a plaintiff is required to prove reliance on a misstatement or omission relative to the purchase of the security.

Which of the following states was not onlythe first state to regulate the sale of securities,but also has the term "blue sky laws" named after it?

Ed,a vice-president of Palmette Products,Inc.,buys 1,000 shares of his company's stock on June 15.His son has medical problems in September,and Ed sells the stock at a profit.Under Section 16,Ed

Discuss the process an issuer follows for either an IPO or a secondary offering.

Under what type of securities offering must the issuer determine if the investor is an accredited,sophisticated investor and if the stock is restricted?

MegaCorp wishes to sell $25 million of securities.The only investors will be 20 unaccredited investors.Which of the following applies to this offering?

A control security is stock which gives the owner a controlling interest in the company.

Any securities offerings covered by the NSMIA must comply with state securities laws.

When a stock underwriter acts as the company's agent in selling stock,it is called a

Under JOBS,privately held companies can sell up to $1 million in securities in any 12-month period if they sell the securities through an approved intermediary.

When the underwriter buys stock from the issuer and sells it to the public it is referred to as a?

The SEC has enforcement powers,including the power to issue cease and desist orders,to levy fines,and to confiscate profits from illegal transactions.

After the SEC completes its review of a preliminary registration statement,it sends the issuer a comment letter setting forth changes that must be made.

Introduction to Law

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International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Cyberlaw and Privacy

Introduction to Contracts

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Consideration

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Capacity and Consent

Written Contracts

Third Parties

Performance, Breach and Discharge

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

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Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants' Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Starting a Business: LLCs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

Shareholder Rights

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Planning for the Future: Estates and Insurance

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