Exam 18: Securities Regulation

A private-placement memorandum is:

Companies are required to release material information to the public, rather than to reveal such information selectively under:

A securities professional who engages in the business of buying and selling securities for their own account is a(n):

In City of Livonia Employees Retirement System v. Boeing Co., City sued Boeing on behalf of all persons who bought Boeing stock in a certain time period on the basis that the company was overly optimistic about the time schedule for the new 787 aircraft. When problems with the plane developed, the stock fell ten percent. Suit claimed that company executives made false statements about the plane, so committed securities fraud. The appeals court held that Boeing was not misleading in its forecasts about its financial future so was not liable to investors who lost money when things turned out worse than expected.

What financial disclosure report is not required of traded securities regulated by the SEC?

The ____ requires that investors be given material information about new securities and it prevents misrepresentation in the sale of securities.

Securities issued by well-known seasoned issuers can use a free-writing prospectus that can be continuously updated on the Web.

Despite the detailed listing of security instruments in the 1933 Securities Act, the Supreme Court has also given a broad definition to what is covered by the Act.

Salman received information about stocks from Michael Kara, his future brother-in-law, who received inside information from Michael's brother, Maher Kara, who worked at Citigroup's investment banking group. Salman and Michael made numerous identical trades and earned significant income. Michael confessed to federal investigators. Salman was convicted of insider trading but contended that he was an innocent tippee who did not receive information directly from Maher who provided the tips and that Maher did not know he was receiving the information. The appeals court held that there was:

The ____, which was established by the Sarbanes-Oxley Act of 2002, has authority to set accounting standards and discipline CPAs for misconduct.

Securities sold in private placements:

Although securities sold under a private placement exemption are exempt from registration, the law requires that investors be given a ____, which is similar to a prospectus.

What is not an element in the Supreme Court's SEC v. Howey definition of securities:

Securities issued by well-known seasoned issuers do not have to be submitted to the SEC for staff review of the offering before being sold.

Chiarella worked at a company that printed financial documents. In one documents, he read confidential information that allowed him to buy stock and make a nice profit because of his knowledge. When sued by the SEC for insider trading, the Supreme Court found Chiarella:

The CEO of Big Ships knows his company has won a $2 billion contract to build ships for the Navy. He is told by the Navy to keep this quiet until the official announcement. Knowing that Big Ships stock will rise when the announcement is made, he tells his children to buy as much Big Ships stock as they can right away. He does not buy any stock. The CEO may:

In City of Livonia Employees Retirement System v. Boeing Co., City sued Boeing on behalf of all persons who bought Boeing stock in a certain time period on the basis that the company was overly optimistic about the time schedule for the new 787 aircraft. When problems with the plane developed, the stock fell ten percent. Suit claimed that company executives made false statements about the plane, so committed securities fraud. The appeals court held that Boeing was:

In SEC v. Howey, the Supreme Court:

Salman received information about stocks from Michael Kara, his future brother-in-law, who received inside information from Michael's brother, Maher Kara, who worked at Citigroup's investment banking group. Salman and Michael made numerous identical trades and earned significant income. Michael confessed to federal investigators. Salman was convicted of insider trading but contended that he was an innocent tippee who did not receive information directly from Maher who provided the tips and that Maher did not know he was receiving the information. The appeals court held that there was:

Securities are important to businesses because: