Exam 18: Securities Regulation

When proxies are solicited, firms must provide shareholders with information about major proposed changes in the company's business.

By SEC rules, a private company is one with less than 100 shareholders that does not allow its stock to be actively traded.

The Securities Act of 1933 regulates:

A prospective issuer of securities must hire which of the following:

A company has no legal liability to repay shareholders the amount they have invested.

The over-the-counter stock market is governed by the Financial Industry Regulatory Authority (FINRA).

All the relevant information that an investor would want to know about a company before investing in it is known as:

Under Regulation D and Rule 504, Small Corporate Offering Registrations can be used for stock issues sold without full registration if the money being raised:

Which of the following would be considered an accredited investor under Regulation D:

____ is the raising of funds through the sale of company stock.

Which of the following securities would NOT be exempt from regulation:

U.S. and foreign security issuers are exempt from registration requirements for the sale of bonds and stocks to institutions with a portfolio of at least $100 million in securities under the provisions of:

The securities law imposes civil liability for misleading statements in securities registration material.

An investor who is presumed sophisticated and wealthy enough to evaluate investment opportunities without an SEC-approved prospectus is known as a(n):

Under securities law, knowingly making a misstatement in company reports is a:

When the SEC reviews a prospectus for a new stock offering it may not:

Some investment companies restrict the ability of their research analysts or investment advisers from investing in the stocks in which they are specialists for their employer.

Corporations must have annual stockholder meetings at which major business decisions of the firm are determined. Since many stockholders are not at meetings, the way they vote their shares is called:

Fact Pattern 21-1 In 2005, Bettina opened Bettina Brownies in a shopping mall. The brownies were a hit and soon Bettina was operating shops in several malls in Illinois. By 2012 she had expanded operations to Indiana and she decided that it was time to finance expansion through the equity markets. With an investment banker, she prepared for the initial offering of Bettina Brownies. She sold 50,000 shares of stock at $10 a share. Expansion continued. Keebler determined that Bettina was a well-run company with an attractive financial position. It began secret negotiations with Bettina to buy her interest in the business. News of the negotiations leaked. Mr. Little, CEO of Keebler, denied that they were pursuing a deal with Bettina. A month later Bettina sold her share of the business to Keebler. Shortly before Bettina sold her interest to Keebler, Joe Kelso, a carpet cleaner was working at Bettina office when he overheard discussion of the sale to Keebler. Joe bought a large number of shares in Bettina. After the Keebler sale was completed, Joe sold his stock for a substantial profit. -Refer to Fact Pattern 21-1. When Bettina first sells stock to the public, which legislation will she need to follow?

The SEC does not allow markups of more than ____ above their market value on securities.