Question 1

The Securities and Exchange Commission (SEC) is an independent, quasi-judicial agency consisting of five commissioners.

Accepted Answer

A) True 
 B)False

Question 2

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power to:

Accepted Answer

A)  issue cease-and-desist orders. 
B)  impose civil penalties up to $850,000. 
C)  bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D)  All of these. 
A)  issue cease-and-desist orders. 
B)  impose civil penalties up to $850,000. 
C)  bring civil actions for specified violations of the 1934 Act against aiders and abettors. 
D)  All of these.

Question 3

A registration statement generally includes all of the following EXCEPT a:

Accepted Answer

A)  financial statement certified by an independent public accountant. 
B)  description of the business. 
C)  description of the management. 
D)  projection of future growth potential. 
A)  financial statement certified by an independent public accountant. 
B)  description of the business. 
C)  description of the management. 
D)  projection of future growth potential.

Question 4

The 1933 Securities Act defines the term "security." The Supreme Court of the United States has adopted a two-tier analysis of what constitutes a security.Within this analysis the Court has used a three-part test to determine whether a non-traditional financial transaction constitutes an investment contract and thus a security.Explain (a) the 1933 Act's statutory definition of security, (b) the courts' general interpretation of the 1933 Act's definition and (c) the Supreme Court's two-tier test.Use case law to illustrate your explanation, if appropriate.Also, why do you think the Supreme Court had to devise such an analysis?

Accepted Answer

​ 
(a) Any note; stock; bond; debenture;

Question 5

The SEC may not advance the effective date of a registration statement.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Marshall, an agent of the North Carolina Pinery Corporation, in offering a cash payment to an official of Mexico to convince the official to use his influence to assist Pinery in obtaining a contract in Mexico, may have violated the laws of Mexico, but not the laws of the United States.

Accepted Answer

A) True 
 B)False

Question 8

Most states require the registration of securities and regulate brokers and dealers.

Accepted Answer

A) True 
 B)False

Question 9

The Securities Act of 1934 imposes significant disclosure requirements upon reporting companies.

Accepted Answer

A) True 
 B)False

Question 10

The Sarbanes-Oxley Act:

Accepted Answer

A)  allows the SEC to add criminal penalties to a disgorgement fund for the benefit of victims of violations of the 1933 and 1934 securities acts. 
B)  requires an outside CPA and the corporate treasurer to certify the financial and other information contained in the issuer's annual and quarterly reports. 
C)  requires that issuers of securities disclose in plain English to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer as the SEC determines is necessary or useful. 
D)  All of these. 
A)  allows the SEC to add criminal penalties to a disgorgement fund for the benefit of victims of violations of the 1933 and 1934 securities acts. 
B)  requires an outside CPA and the corporate treasurer to certify the financial and other information contained in the issuer's annual and quarterly reports. 
C)  requires that issuers of securities disclose in plain English to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer as the SEC determines is necessary or useful. 
D)  All of these.

Question 11

The use of the Internet or other means to raise money-typically in small amounts-from a large number of contributors to support a specific venture is called:

Accepted Answer

A)  groupfunding. 
B)  initial public offering. 
C)  startup capital. 
D)  crowdfunding. 
A)  groupfunding. 
B)  initial public offering. 
C)  startup capital. 
D)  crowdfunding.

Question 12

Only civil liability may be imposed for violations of the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Question 13

Securities that are exempt from registration under the federal securities laws include:

Accepted Answer

A)  securities of domestic banks. 
B)  annuity contracts issued by state-regulated insurance companies. 
C)  bonds issued by a city. 
D)  All of these are exempt. 
A)  securities of domestic banks. 
B)  annuity contracts issued by state-regulated insurance companies. 
C)  bonds issued by a city. 
D)  All of these are exempt.

Question 14

As amended in 2008, SEC rules define a small business issuer as a noninvestment company with less than $10 million in public float.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would NOT be exempt from registration under the 1933 Securities Act?

Accepted Answer

A)  An offering restricted to the residents of the state in which the issuing company is a resident and doing business. 
B)  An offering by a noninvestment company issuer for $4 million in securities over 12 months without general advertising or general solicitation. 
C)  An offering of limited partnership tax shelters. 
D)  A private offering to sophisticated investors who will not redistribute them. 
A)  An offering restricted to the residents of the state in which the issuing company is a resident and doing business. 
B)  An offering by a noninvestment company issuer for $4 million in securities over 12 months without general advertising or general solicitation. 
C)  An offering of limited partnership tax shelters. 
D)  A private offering to sophisticated investors who will not redistribute them.

Question 16

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 17

Prohibited bribery can result in fines and imprisonment under the antibribery provision of :

Accepted Answer

A)  the Private Securities Litigation Reform Act. 
B)  the Foreign Corrupt Practices Act. 
C)  the Securities and Exchange Commission. 
D)  None of these. 
A)  the Private Securities Litigation Reform Act. 
B)  the Foreign Corrupt Practices Act. 
C)  the Securities and Exchange Commission. 
D)  None of these.

Question 18

The rule that prohibits schemes and devices to defraud investors is Rule:

Accepted Answer

A)  504 
B)  144 
C)  10b-5 
D)  16(b) 
A)  504 
B)  144 
C)  10b-5 
D)  16(b)

Question 19

Rule 505, as promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

Accepted Answer

A) True 
 B)False

Question 20

The 1934 Securities Exchange Act requires registration of:

Accepted Answer

A)  all regulated publicly held companies. 
B)  securities being issued initially. 
C)  statutory outsiders. 
D)  tippees. 
A)  all regulated publicly held companies. 
B)  securities being issued initially. 
C)  statutory outsiders. 
D)  tippees.

Exam 39: Securities Regulation

The Securities and Exchange Commission (SEC) is an independent, quasi-judicial agency consisting of five commissioners.

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC power to:

A registration statement generally includes all of the following EXCEPT a:

The SEC may not advance the effective date of a registration statement.

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

Marshall, an agent of the North Carolina Pinery Corporation, in offering a cash payment to an official of Mexico to convince the official to use his influence to assist Pinery in obtaining a contract in Mexico, may have violated the laws of Mexico, but not the laws of the United States.

Most states require the registration of securities and regulate brokers and dealers.

The Securities Act of 1934 imposes significant disclosure requirements upon reporting companies.

The Sarbanes-Oxley Act:

The use of the Internet or other means to raise money-typically in small amounts-from a large number of contributors to support a specific venture is called:

Only civil liability may be imposed for violations of the Securities Act of 1933.

Securities that are exempt from registration under the federal securities laws include:

As amended in 2008, SEC rules define a small business issuer as a noninvestment company with less than $10 million in public float.

Which of the following would NOT be exempt from registration under the 1933 Securities Act?

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.

Prohibited bribery can result in fines and imprisonment under the antibribery provision of :

The rule that prohibits schemes and devices to defraud investors is Rule:

Rule 505, as promulgated by the SEC, provides a nonexclusive safe harbor for securing the intrastate exemption.

The 1934 Securities Exchange Act requires registration of:

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

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 Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

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 Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

Filters