Question 1

"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 2

A solicitation of proxies from holders of stock:

Accepted Answer

A)  is comprehensively regulated by the SEC. 
B)  includes a request for a proxy, but not a request to revoke a proxy. 
C)  gives any security holder entitled to vote the opportunity to communicate with other security holders. Upon written request, the corporation must mail the communication at the corporation's expense along with the solicitation. 
D)  All of these are correct. 
A)  is comprehensively regulated by the SEC. 
B)  includes a request for a proxy, but not a request to revoke a proxy. 
C)  gives any security holder entitled to vote the opportunity to communicate with other security holders. Upon written request, the corporation must mail the communication at the corporation's expense along with the solicitation. 
D)  All of these are correct.

Question 3

Which of the following is a basic objective of the 1933 Securities Act?

Accepted Answer

A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To 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. 
C)  Both of these. 
D)  Neither of these. 
A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To 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. 
C)  Both of these. 
D)  Neither of these.

Question 4

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

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 8

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 9

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 10

Registration under the 1933 Act calls for disclosure of which of the following?

Accepted Answer

A)  A description of the registrant's properties and business. 
B)  A description of the significant provisions of the security to be offered for sale and its relationship to the registrant's other capital securities. 
C)  Compensation paid to directors, the CEO, CFO, and the three other highest paid executive officers. 
D)  All of these. 
A)  A description of the registrant's properties and business. 
B)  A description of the significant provisions of the security to be offered for sale and its relationship to the registrant's other capital securities. 
C)  Compensation paid to directors, the CEO, CFO, and the three other highest paid executive officers. 
D)  All of these.

Question 11

__________, 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 12

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 13

Dryler Corporation sold unregistered securities that were required under the 1933 Act to be registered. Howlett-Midland Corporation used an outdated prospectus in the sale of its securities. Discuss the civil liability of the companies for these acts.

Accepted Answer

Section 12(a)(1) of the 1933 Act imposes

Question 14

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 15

The 1933 Securities Act differs from the 1934 Act in that the former deals with trading in stock that has already been issued and the latter has to do with the issuance of securities.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

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 19

As amended in 2008, SEC Rule 144 imposes stricter requirements on securities resales of issuers subject to 1934 Act reporting requirements than on securities resales of non-reporting issuers.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 39: Securities Regulation

"Insider trading" rules pertain to:

A solicitation of proxies from holders of stock:

Which of the following is a basic objective of the 1933 Securities Act?

A registration statement becomes public immediately on filing with the SEC, but a prospectus only becomes public upon signature of the chief financial officer.

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

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

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.

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.

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:

Registration under the 1933 Act calls for disclosure of which of the following?

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

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

Dryler Corporation sold unregistered securities that were required under the 1933 Act to be registered. Howlett-Midland Corporation used an outdated prospectus in the sale of its securities. Discuss the civil liability of the companies for these acts.

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

The 1933 Securities Act differs from the 1934 Act in that the former deals with trading in stock that has already been issued and the latter has to do with the issuance of securities.

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

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.

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

As amended in 2008, SEC Rule 144 imposes stricter requirements on securities resales of issuers subject to 1934 Act reporting requirements than on securities resales of non-reporting issuers.

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

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

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.