Exam 18: Securities Regulation

The Supreme Court has ruled that for someone to be guilty of insider trading, the person must violate a fiduciary duty not to use the inside information.

Accredited investors, under SEC Regulation D for private placements include:

The buying or selling of stock by persons who have access to information affecting the value of the stock that has not yet been revealed to the public is called:

Officers of a company have a duty to use "reasonable efforts" to make a profit for shareholders, but are rarely liable for losses suffered during their leadership.

A company that issues debt securities paying a fixed return would be defined by the Investment Company Act as a(n):

An exempt security, like a government bond, is not subject to either the registration or disclosure requirements of the federal statutes.

Insider trading is:

The private placement exemption must be issued for all securities not sold on the public securities markets (such as the New York Stock Exchange).

You are on the subway in New York when you overhear two people you do not know talking about an upcoming merger, news not yet public. They seem to know their stuff. If you buy stock based on this information, and profit when the information turns out true, you have:

The president of a company says that new products to be introduced are sure to double company profits. Based on this, investors buy stock in the company, pushing up its price. The products flop, the company loses money, so the stock price falls. Investors are most likely to sue the president of the company under what theory provided by the securities law?

The Federal Trade Commission is responsible for enforcement and administration of federal securities law.

You work for a securities firm matching orders to buy and sell stocks in small companies. A customer places an order to buy 100 shares of X Corp. when they sell for $40 a share. You find a seller at $39 per share. May you buy the shares yourself at $39 and then sell them for $40 to you client?

The securities registration process requires all the following information to be provided to prospective investors except:

Having an undivided interest in a company means that:

Securities issued by well-known seasoned issuers must be sold within three months or be returned for re-review by the SEC staff.

Which of the following is an important impact of the Sarbanes-Oxley Act:

The first regulation of securities in the U.S. was the:

If you own a security in a company, such as common stock in IBM, you have:

Insider trading is:

A debt instrument will typically specify the rate of interest charged to the sum borrowed.