Exam 22: Securities Fraud and Insider Trading.

A controlling shareholder is traditionally considered an insider.

In the case of a(n)__________,the U.S.Supreme Court has ruled that the reliance will be presumed under Rule 10b-5 if the fact was material.

Under Rule 10b-5 a company may not have a "no comment" policy,and must act to dispel untrue rumors.

When analyzing insider trading,the person giving the tip is the __________,the person receiving the tip is the __________,officers and directors are __________,and persons working with the issuer are __________.

The SEC itself has criminal enforcement power.

The requirement that the defendant in a 10b-5 action have used interstate commerce,the mails,or a national securities exchange gives Congress the power to regulate the defendant's conduct under:

Scienter requires more than mere negligence or lack of due care.

Which of the following represents the general rule under rule 10b-5 in regard to the duty of a company to reveal corporate developments?

A buyer or seller of stock can only recover damages if a material fact is misrepresented or omitted from company communications.All of the following are considered material facts,EXCEPT:

Which of the following is true regarding Section 16(c)'s restriction on selling stock short?

Under Section 16(b)pertaining to short-swing profits,a person will be considered a(n)__________ of any securities held by his or her immediate family or any other relative living in his or her household.

Lawsuits under Section 10(b)must be brought within __________ of the date the plaintiff discovered or should have discovered the facts constituting the violation or within __________ of the date of the violation,whichever is earlier.

Which of the following is true regarding who can sue under Rule 10b-5?

Which of the following is NOT a part of the safe harbor provision for forward-looking statements under the 1934 Act?

Accountants have to sign a written consent before their audited report can be included in a registration statement.

An employee who trades or tips using confidential information belonging to his or her employer can be liable under the Mail and Wire Fraud Acts.

In theUnited States v.O'Hagan case referenced in the text,O'Hagan was a partner in the law firm of Dorsey & Whitney who represented Grand Met.Grand Met revealed to O'Hagan that Grand Met intended to make a tender offer to Pillsbury.Based on this confidential material information form his client O'Hagan purchased stock and options in Pillsbury prior to a public announcement of Grand Met's tender offer for Pillsbury.O'Hagan realized over $4million in profits but was later convicted of insider trading.The U.S.Supreme Court upheld O'Hagans criminal conviction based on the:

Temporary insiders are persons not directly employed by the corporation,but who acquire confidential information through the performance of professional services.

Section 16(b)of the 1934 Act governs __________ by officers,directors,and greater-than-10% shareholders of equity securities of a public company.

A securities fraud claim can be used as a predicate act in a civil case under the Racketeer Influenced and Corrupt Organizations Act regardless of whether the defendant has been criminally convicted in connection with the fraud.