Question 1

The tender offer is open to select holders of the class of shares subject to the tender offer.

Accepted Answer

A) True 
 B)False

Question 2

The Securities Act of 1933 has two basic objectives, one of which is to:

Accepted Answer

A)  extend protection to investors trading in outstanding, issued securities. 
B)  grant the SEC power to impose administrative, civil penalties up to $600,000. 
C)  regulate disclosure requirements on publicly held corporations. 
D)  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. 
A)  extend protection to investors trading in outstanding, issued securities. 
B)  grant the SEC power to impose administrative, civil penalties up to $600,000. 
C)  regulate disclosure requirements on publicly held corporations. 
D)  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.

Question 3

Under the Dodd-Frank Act, the SEC must issue rules requiring issuers to disclose in annual proxy statements the reasons the issuer has chosen to combine or separate the positions of CEO and chairman of the board of directors.

Accepted Answer

A) True 
 B)False

Question 4

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions.

Accepted Answer

A) True 
 B)False

Question 5

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

Accepted Answer

A) True 
 B)False

Question 6

With few exceptions, an issuer must file preliminary proxy statements and forms with the SEC at least 10 days before they are sent to investors.

Accepted Answer

A) True 
 B)False

Question 7

The antifraud provisions of the 1934 Act would prohibit which of the following?

Accepted Answer

A)  Lying about the value of the firm's assets to sell stock. 
B)  Disclosing that the firm has discovered oil on its property in order to sell stock. 
C)  Telling about the bad health of the CEO in a transaction to purchase stock. 
D)  Not disclosing the salaries of secretaries of a large firm whose stock is being sold. 
A)  Lying about the value of the firm's assets to sell stock. 
B)  Disclosing that the firm has discovered oil on its property in order to sell stock. 
C)  Telling about the bad health of the CEO in a transaction to purchase stock. 
D)  Not disclosing the salaries of secretaries of a large firm whose stock is being sold.

Question 8

If a company has assets of over $10 million but trades its stock over the counter, it is nevertheless required to comply with the 1934 Act if it has:

Accepted Answer

A)  500 or more shareholders. 
B)  one class of stock with 500 or more shareholders. 
C)  500 or more shares of stock outstanding. 
D)  500 different investors. 
A)  500 or more shareholders. 
B)  one class of stock with 500 or more shareholders. 
C)  500 or more shares of stock outstanding. 
D)  500 different investors.

Question 9

Section 16(b) of the 1934 Act differs from Rule 10b-5 in that the latter:

Accepted Answer

A)  applies to transfers within 6 months of each other. 
B)  only applies to officers, and directors. 
C)  requires material inside information. 
D)  only applies to 10% shareholders. 
A)  applies to transfers within 6 months of each other. 
B)  only applies to officers, and directors. 
C)  requires material inside information. 
D)  only applies to 10% shareholders.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Rule 10b-5 applies to any:

Accepted Answer

A)  buyer of a registered security. 
B)  seller of a registered security. 
C)  person who buys or sells a registered security. 
D)  person who buys or sells any security. 
A)  buyer of a registered security. 
B)  seller of a registered security. 
C)  person who buys or sells a registered security. 
D)  person who buys or sells any security.

Question 12

The Securities Act of 1934 imposes sanctions for noncompliance with its disclosure and antifraud requirements. These sanctions include:

Accepted Answer

A)  civil liability to injured investors and issuers. 
B)  civil penalties. 
C)  criminal penalties. 
D)  All of these. 
A)  civil liability to injured investors and issuers. 
B)  civil penalties. 
C)  criminal penalties. 
D)  All of these.

Question 13

"Restricted securities" are exempted from registration.

Accepted Answer

A) True 
 B)False

Question 14

"Insider trading" rules pertain to:

Accepted Answer

A)  tippees. 
B)  officers and directors. 
C)  underwriters . 
D)  All of these. 
A)  tippees. 
B)  officers and directors. 
C)  underwriters . 
D)  All of these.

Question 15

Under the Securities Exchange Act of 1934 and the Williams Act, a tender offer:

Accepted Answer

A)  must be disclosed if the offeror's acquisition would give him 3 percent of the target's stock. 
B)  must be disclosed only to the shareholders of the target corporation. 
C)  disclosure is informational to ensure that investors may make an informed decision. 
D)  is valid only up to 40% of the target's stock. 
A)  must be disclosed if the offeror's acquisition would give him 3 percent of the target's stock. 
B)  must be disclosed only to the shareholders of the target corporation. 
C)  disclosure is informational to ensure that investors may make an informed decision. 
D)  is valid only up to 40% of the target's stock.

Question 16

__________, promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

Accepted Answer

A)  Rule 506. 
B)  Rule 505. 
C)  Rule 147. 
D)  Rule 504. 
A)  Rule 506. 
B)  Rule 505. 
C)  Rule 147. 
D)  Rule 504.

Question 17

All of the following are types of illegal insider trading EXCEPT:

Accepted Answer

A)  officers or directors who pass valuable information to someone who trades in the company's stock and then is repaid in some way. 
B)  an officer or director who makes a direct profit on an investment just after the public announcement of a major development related to that investment. 
C)  a director who buys through overseas financial institutions stocks and options in his own company prior to a public announcement of information which greatly enhances the value of the stock. 
D)  an officer of a company who, for a fee, related to investment bankers information about companies her company is planning to target for takeover. 
A)  officers or directors who pass valuable information to someone who trades in the company's stock and then is repaid in some way. 
B)  an officer or director who makes a direct profit on an investment just after the public announcement of a major development related to that investment. 
C)  a director who buys through overseas financial institutions stocks and options in his own company prior to a public announcement of information which greatly enhances the value of the stock. 
D)  an officer of a company who, for a fee, related to investment bankers information about companies her company is planning to target for takeover.

Question 18

In a unanimous 2018 decision, the U.S. Supreme Court held that under the Securities Litigation Uniform Standards Act of 1998, (1) state courts have jurisdiction over class actions alleging violations of only the 1933 Act and (2) defendants are not permitted to remove such actions from state court to federal court.

Accepted Answer

A) True 
 B)False

Question 19

In 2006, the SEC abolished the requirement that a registration statement disclose compensation paid to senior executives and directors.

Accepted Answer

A) True 
 B)False

Question 20

Solicitation includes any request:

Accepted Answer

A)  for a proxy. 
B)  not to execute a proxy. 
C)  to revoke a proxy. 
D)  All of these are solicitations. 
A)  for a proxy. 
B)  not to execute a proxy. 
C)  to revoke a proxy. 
D)  All of these are solicitations.

Exam 39: Securities Regulation

The tender offer is open to select holders of the class of shares subject to the tender offer.

The Securities Act of 1933 has two basic objectives, one of which is to:

Under the Dodd-Frank Act, the SEC must issue rules requiring issuers to disclose in annual proxy statements the reasons the issuer has chosen to combine or separate the positions of CEO and chairman of the board of directors.

The due diligence defense generally requires the defendant to show that he had reasonable grounds to believe and did believe that there were no untrue statements or material omissions.

There are rigorously enforced restrictions regarding both number and qualification of investors who purchase securities under Regulation A.

With few exceptions, an issuer must file preliminary proxy statements and forms with the SEC at least 10 days before they are sent to investors.

The antifraud provisions of the 1934 Act would prohibit which of the following?

If a company has assets of over $10 million but trades its stock over the counter, it is nevertheless required to comply with the 1934 Act if it has:

Section 16(b) of the 1934 Act differs from Rule 10b-5 in that the latter:

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

Rule 10b-5 applies to any:

The Securities Act of 1934 imposes sanctions for noncompliance with its disclosure and antifraud requirements. These sanctions include:

"Restricted securities" are exempted from registration.

"Insider trading" rules pertain to:

Under the Securities Exchange Act of 1934 and the Williams Act, a tender offer:

__________, promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

All of the following are types of illegal insider trading EXCEPT:

In 2006, the SEC abolished the requirement that a registration statement disclose compensation paid to senior executives and directors.

Solicitation includes any request:

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

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