Question 1

Willful violations of the Securities Act of 1933 are subject to a fine of not more than __________ and/or imprisonment of not more than __________ or both.

Accepted Answer

A)  $5,000, one year. 
B)  $10,000, five years. 
C)  $100,000, five years. 
D)  $250,000, ten years. 
A)  $5,000, one year. 
B)  $10,000, five years. 
C)  $100,000, five years. 
D)  $250,000, ten years.

Question 2

Recovery of damages under Rule 10b-5 requires proof of:

Accepted Answer

A)  reliance on a misstatement or omission. 
B)  materiality. 
C)  connection with the purchase or sale of a security . 
D)  All of these. 
A)  reliance on a misstatement or omission. 
B)  materiality. 
C)  connection with the purchase or sale of a security . 
D)  All of these.

Question 3

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a portion of her profits if they will put up $2,000 each towards her endeavor.Is their investment a "security"?

Accepted Answer

A)  Yes, since Marge will do all the work. 
B)  Yes, because her neighbors will have a security interest in the jelly. 
C)  No, since the neighbors are putting no effort into it. 
D)  No, because Marge is not issuing stock certificates. 
A)  Yes, since Marge will do all the work. 
B)  Yes, because her neighbors will have a security interest in the jelly. 
C)  No, since the neighbors are putting no effort into it. 
D)  No, because Marge is not issuing stock certificates.

Question 4

Which of the following is NOT a purpose of federal securities regulation?

Accepted Answer

A)  To ensure that only worthwhile securities are sold in interstate commerce. 
B)  To ensure adequate disclosure by issuers of securities. 
C)  To ensure that inside information is not abused. 
D)  To prevent the use of fraud in the marketing of securities. 
A)  To ensure that only worthwhile securities are sold in interstate commerce. 
B)  To ensure adequate disclosure by issuers of securities. 
C)  To ensure that inside information is not abused. 
D)  To prevent the use of fraud in the marketing of securities.

Question 5

Effective in 2010, the SEC adopted new requirements to improve the disclosure shareholders of public companies receive regarding compensation and corporate governance.These new rules require disclosure of any directorships held by each nominee at any time during the past seven years at any public company.

Accepted Answer

A) True 
 B)False

Question 6

The Securities Act of 1933 is also called the "Truth in Securities Act."

Accepted Answer

A) True 
 B)False

Question 7

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders and to impose civil penalties.

Accepted Answer

A) True 
 B)False

Question 8

EDGAR is the computer system established by the SEC to perform automated collection, validation, and dissemination of required reports.

Accepted Answer

A) True 
 B)False

Question 9

Emerging growth companies (EGCs) have strict disclosure requirements and limited permissible communications to avoid a repeat of the dot-com disaster of the late 1990's.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not one of the situations in which the 1934 Securities Exchange Act requires disclosure during a "tender offer"?

Accepted Answer

A)  When a person or group acquires more than 5 percent of a class of voting securities registered under the 1934 Act. 
B)  When a person makes a tender offer for more than 5 percent of a class of registered equity securities. 
C)  When a company makes a tender offer for any voting stock in another company. 
D)  When the issuer makes an offer to repurchase its own registered shares. 
A)  When a person or group acquires more than 5 percent of a class of voting securities registered under the 1934 Act. 
B)  When a person makes a tender offer for more than 5 percent of a class of registered equity securities. 
C)  When a company makes a tender offer for any voting stock in another company. 
D)  When the issuer makes an offer to repurchase its own registered shares.

Question 13

In 1992, the SEC issued new rules establishing an integrated registration and reporting system for small business issuers.

Accepted Answer

A) True 
 B)False

Question 14

The Reform Act's safe harbor under the 1933 Act eliminates civil liability based on an untrue statement or omission if a forward-looking statement is:

Accepted Answer

A)  material. 
B)  made without actual knowledge that it was false or misleading. 
C)  unidentified as a forward-looking statement 
D)  All of these. 
A)  material. 
B)  made without actual knowledge that it was false or misleading. 
C)  unidentified as a forward-looking statement 
D)  All of these.

Question 15

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 16

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 17

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

As amended in 1999 and 2017, SEC Rule 504 provides private, noninvestment company issuers with an exemption from registration for issues not exceeding $5 million within twelve months.

Accepted Answer

A) True 
 B)False

Question 20

If Terry makes a tender offer to the owners of Pizza Village's registered stock, he must file a statement with the SEC if he:

Accepted Answer

A)  owns 1% of Pizza Village stock. 
B)  will, after the acquisition, own 5% of all Pizza Village stock. 
C)  will, after the acquisition, own 5% of one class of Pizza Village stock. 
D)  will own more than 3% of the stock in all classes. 
A)  owns 1% of Pizza Village stock. 
B)  will, after the acquisition, own 5% of all Pizza Village stock. 
C)  will, after the acquisition, own 5% of one class of Pizza Village stock. 
D)  will own more than 3% of the stock in all classes.

Exam 39: Securities Regulation

Willful violations of the Securities Act of 1933 are subject to a fine of not more than __________ and/or imprisonment of not more than __________ or both.

Recovery of damages under Rule 10b-5 requires proof of:

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a portion of her profits if they will put up $2,000 each towards her endeavor.Is their investment a "security"?

Which of the following is NOT a purpose of federal securities regulation?

The Securities Act of 1933 is also called the "Truth in Securities Act."

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to issue cease and desist orders and to impose civil penalties.

EDGAR is the computer system established by the SEC to perform automated collection, validation, and dissemination of required reports.

Emerging growth companies (EGCs) have strict disclosure requirements and limited permissible communications to avoid a repeat of the dot-com disaster of the late 1990's.

Solicitation includes any request:

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

Which of the following is not one of the situations in which the 1934 Securities Exchange Act requires disclosure during a "tender offer"?

In 1992, the SEC issued new rules establishing an integrated registration and reporting system for small business issuers.

The Reform Act's safe harbor under the 1933 Act eliminates civil liability based on an untrue statement or omission if a forward-looking statement is:

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

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:

The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 granted the SEC the power to impose administrative, civil penalties up to the current inflation-adjusted amount of $725,000.

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

As amended in 1999 and 2017, SEC Rule 504 provides private, noninvestment company issuers with an exemption from registration for issues not exceeding $5 million within twelve months.

If Terry makes a tender offer to the owners of Pizza Village's registered stock, he must file a statement with the SEC if he:

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

Willful violations of the Securities Act of 1933 are subject to a fine of not more than and/or imprisonment of not more than or both.