Exam 18: Governance and Regulation: Securities Law

Betty Furnish owns a consignment furniture business that she wishes to expand to several other cities.She does need capital to be able to do so and needs to raise $1 million.Betty says she cannot afford a full SEC registration.Can you offer Betty some suggestions for raising the capital?

Black-out periods are timeframes in which trading in company stockby company employees is prohibited.

Ralph Newsome is an employee at Quest Industries.In the men's room he overhears two officers discussing a merger that they say will be announced in two days.Ralph purchases 1,000 shares of Quest.When the merger is announced,Quest's stock has a 15% bounce in value.

Which of the following is not a Section 12 violation?

A tombstone ad:

The 1934 Act proxy regulations apply:

A primary offering is a first-time offering of shares for sale.

The scienter required for proof of a 10(b)violation is:

When can a company run a tombstone ad?

A company registered on the New York Stock Exchange must file a 10-Q report.

Directors A and B of a large,publicly traded company filed advance reports of their plans to sell stock.Such advanced filed plans allow directors and officers to sell shares without having to worry about whether they have inside information at the time of the sale.The dates for their sales are locked in for one year.Directors A and B have,however,encouraged the CEO to announce a boost in sales and revenues prior to the quarterly financial statement release because such an announcement would allow the information to go public and thereby allow them to sell their shares,according to their prior-approved plan,at a much higher price.Which of the following is correct?

Section 16 applies:

Sarbanes-Oxley requires all covered companies to have a code of ethics for financial officers.

Blue sky laws are state securities registration laws.

Charlie Seam is a broker for a major stockbroker in New York City.Charlie took a job at night with a janitorial firm that is responsible for doing the cleaning on several of the major law firms in New York.These firms also handle the legal business for the largest companies in the United States.Over the past few years these same firms have drafted the documents and done the necessary filings for takeovers among these firms.Charlie has discovered that,as a supervisor,he is able to move freely around the offices and read of developing events on the partners' desks.Through this job Charlie has been able to make some very good investments for himself and his clients.Do Charlie's actions violate 10(b)?

A false prospectus is covered under Section 11.

The following stock transactions were completed by the executive vice president of Vinco,Inc.,a publicly traded corporation: January 12,2016 -EVP sells 100 shares @ $40 per share May 5,2016 - EVP buys 100 shares @ $20 per share June 1,2016 - EVP sells 100 shares @ $30 per share Which of the following statements is correct?

Under the new securities rules issued under the JOBS Act,which of the following companies would need to register its securities under the 1934 Securities Exchange Act for purposes of periodic reporting?

Discuss Goldman Sachs obligation to disclose to its investors its position in the mortgage instrument markets.

Registration statements must include audited financial statements.