Question 1

A signed writing by a shareholder authorizing a named person to vote his stock at a specified meeting of shareholders is a(n):

Accepted Answer

A)  control. 
B)  affiliate. 
C)  proxy. 
D)  registration statement. 
A)  control. 
B)  affiliate. 
C)  proxy. 
D)  registration statement.

Question 2

SEC regulations concerning fraud in securities transactions apply to:

Accepted Answer

A)  all securities transactions involving interstate commerce. 
B)  only securities registered under the 1934 Act. 
C)  only securities registered under the 1933 Act. 
D)  securities registered under both the 1933 and 1934 Acts. 
A)  all securities transactions involving interstate commerce. 
B)  only securities registered under the 1934 Act. 
C)  only securities registered under the 1933 Act. 
D)  securities registered under both the 1933 and 1934 Acts.

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

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

Accepted Answer

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

Question 5

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 6

The civil penalty for a person who trades on inside information:

Accepted Answer

A)  is payable into the U.S. Treasury. 
B)  must be imposed as a result of an action brought within three years after the date of the purchase or sale. 
C)  is, for a controlling person, up to the greater of $1 million or two times the profit gained or loss avoided as a result of the controlled person's violation. 
D)  All of these. 
A)  is payable into the U.S. Treasury. 
B)  must be imposed as a result of an action brought within three years after the date of the purchase or sale. 
C)  is, for a controlling person, up to the greater of $1 million or two times the profit gained or loss avoided as a result of the controlled person's violation. 
D)  All of these.

Question 7

Bonds are included in the definition of the term "security."

Accepted Answer

A) True 
 B)False

Question 8

"Shelf registrations" allow delayed sales of stock.

Accepted Answer

A) True 
 B)False

Question 9

Section 11 of the Securities Act of 1933 imposes liability on:

Accepted Answer

A)  the issuer. 
B)  all persons who signed the registration statement. 
C)  every director or partner, and all underwriters. 
D)  All of these. 
A)  the issuer. 
B)  all persons who signed the registration statement. 
C)  every director or partner, and all underwriters. 
D)  All of these.

Question 10

Shelf registrations allow issuers to register securities that are to be offered and sold on a delayed or continuous basis in the future, but the provision allowing it does not apply to all companies.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

Accepted Answer

A)  Bonds. 
B)  Stocks. 
C)  Investments in limited partnerships. 
D)  An investment in a nonprofit venture based on one's own entrepreneurial efforts. 
A)  Bonds. 
B)  Stocks. 
C)  Investments in limited partnerships. 
D)  An investment in a nonprofit venture based on one's own entrepreneurial efforts.

Question 12

The Securities Act of 1933 regulates tender offers and proxy solicitations.

Accepted Answer

A) True 
 B)False

Question 13

Insiders would violate the short-swing profits rule (16b) of the 1934 Act by buying stock on January 1 and selling on May 1.

Accepted Answer

A) True 
 B)False

Question 14

Securities sold under Regulation A must be registered if they are resold.

Accepted Answer

A) True 
 B)False

Question 15

For purposes of Section 16(b) of the 1934 Securities Exchange Act, which of the following are not "insiders"?

Accepted Answer

A)  Shareholders owning more than 10 percent of the stock of a corporation listed on a national stock exchange or registered with the SEC. 
B)  Directors. 
C)  Officers. 
D)  All of these may be considered insiders. 
A)  Shareholders owning more than 10 percent of the stock of a corporation listed on a national stock exchange or registered with the SEC. 
B)  Directors. 
C)  Officers. 
D)  All of these may be considered insiders.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

A defense to an action based on material omissions and untrue statements contained in a registration statement is:

Accepted Answer

A)  innocent mistake. 
B)  due diligence. 
C)  constructive disclosure. 
D)  reasonable diligence. 
A)  innocent mistake. 
B)  due diligence. 
C)  constructive disclosure. 
D)  reasonable diligence.

Question 19

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 20

The registration requirement of the 1934 Act pertains to the entire class of securities rather than to a specific offering.

Accepted Answer

A) True 
 B)False

Exam 39: Securities Regulation

A signed writing by a shareholder authorizing a named person to vote his stock at a specified meeting of shareholders is a(n):

SEC regulations concerning fraud in securities transactions apply to:

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

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

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.

The civil penalty for a person who trades on inside information:

Bonds are included in the definition of the term "security."

"Shelf registrations" allow delayed sales of stock.

Section 11 of the Securities Act of 1933 imposes liability on:

Shelf registrations allow issuers to register securities that are to be offered and sold on a delayed or continuous basis in the future, but the provision allowing it does not apply to all companies.

Which of the following would ordinarily NOT be considered a security under the federal securities laws?

The Securities Act of 1933 regulates tender offers and proxy solicitations.

Insiders would violate the short-swing profits rule (16b) of the 1934 Act by buying stock on January 1 and selling on May 1.

Securities sold under Regulation A must be registered if they are resold.

For purposes of Section 16(b) of the 1934 Securities Exchange Act, which of the following are not "insiders"?

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

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

A defense to an action based on material omissions and untrue statements contained in a registration statement is:

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

The registration requirement of the 1934 Act pertains to the entire class of securities rather than to a specific offering.

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