Exam 21: Investor Protection, Insider Trading, and Corporate Governance

Refer to Fact Pattern 21-1. If Drilling Tools is exempt from the federal registration requirement, Drilling Tools is

Sun & Ski Tours Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold

Trail Bike Corporation is a public company whose shares are traded in the public securities markets and does not qualify for an exemption from registration requirements. Under the Securities Act of 1933, Trail Bike is required to

Rollo is the chief executive officer of Specialty Magazines, Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Rollo must

Adrian, the chief executive officer of Beds+Sofas, Inc., intentionally understates the amount of Beds+Sofas' debts in information provided to investors as part of an issue of Beds+Sofas' stock. Cassie buys the stock and suffers a loss. Adrian may be subject to

"Forward-looking" financial forecasts that turn out to be wrong are never protected against liability for securities fraud.

The Securities and Exchange Commission has implemented no new regulations since Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Insider trading occurs when persons buy or sell securities on the basis of information that is not available to the pubic.

Cattle Ranch Company offers its stock for sale only in a single state. The law in Cattle Ranch's state is like the law in most states. Cattle Ranch's offer is subject to state securities statutes that include

Most securities can be resold without registration.

State securities laws apply mainly to interstate transactions.

The Sarbanes-Oxley Act of 2002 attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for violations of securities laws.

NuTrend Clothing Corporation is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is

Boats and Yachts Corporation is a public company, which California regulates and in which Dorian invests. The Sarbanes-Oxley Act of 2002 introduced direct federal corporate governance requirements for

For civil sanctions to be imposed under

Global Trade Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that Global Trade must​

Karin, an officer for Liquified Natural Gas Corporation (LNG), buys 10,000 shares of LNG stock. One week later, LNG announces that it will merge with a competitor, Mining & Piping Company, and the price of LNG stock increases. One month later, Karin sells her shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Karin would not be liable if, after buying the stock, she had waited

As part of a stock offering for Designer Studio Corporation, the firm's accountant Evelyn intentionally misrepresents material facts in the prospectus. Flores buys the stock unaware of the misrepresentation and suffers a loss. Evelyn may be subject to

The Securities Exchange Act of 1934 only applies to companies that have assets in excess of $5 million and five hundred or more employees.

Hawaiian Shirts, Inc., wants to issue stock of $4 million in a single offering under Rule 504. The corporation must provide disclosure documents that generally are the same as those used in registered offerings to