Question 1

Under the Sarbanes-Oxley Act,list the types of services that auditing firms are prohibited from providing to companies.

Accepted Answer

One of the purposes of the Sarbanes-Oxley Act is to create and maintain a separation of auditing and consulting functions to facilitate independence.As a result,the Public Company Accounting Oversight Board requires that auditing firms refrain from conducting a variety of nonauditing services.These services include bookkeeping,systems designs and implementation,appraisals and valuations,actuarial services,human resource functions,and investment banking.

Question 2

The Sarbanes-Oxley Act has increased the statute of limitations for various infringements of both the 1933 Act and the 1934 Act.

Accepted Answer

A) True 
 B)False  False

Question 3

The Financial Stability Oversight Council was established by the

Accepted Answer

A)  Securities Exchange Act of 1934. 
B)  Sherman Antitrust Act of 1890. 
C)  Sarbanes-Oxley Act of 2002. 
D)  Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. 
E)  Securities Act of 1933. 
A)  Securities Exchange Act of 1934. 
B)  Sherman Antitrust Act of 1890. 
C)  Sarbanes-Oxley Act of 2002. 
D)  Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. 
E)  Securities Act of 1933. D

Question 4

The burden of proof when alleging a due diligence defense is on the expert.

Accepted Answer

A) True 
 B)False

Question 5

______ are brief announcements identifying the security and stating its price,by whom orders will be executed,and from whom a prospectus may be obtained.

Accepted Answer

A)  Tombstone ads 
B)  Institutional ads 
C)  Coupon ads 
D)  Adjunct ads 
E)  Overlay ads 
A)  Tombstone ads 
B)  Institutional ads 
C)  Coupon ads 
D)  Adjunct ads 
E)  Overlay ads

Question 6

How does the Securities Exchange Act of 1934 address the issue of insider transactions?

Accepted Answer

Section 16 of the Securities Exchange Ac

Question 7

The buyer's damages of a defrauded purchaser of securities

Accepted Answer

A)  are measured at the time of purchase. 
B)  include a punitive amount to discourage further fraud. 
C)  are measured at the time when the fraud is discovered. 
D)  are considered sunk costs and irrecoverable. 
E)  include speculative damages. 
A)  are measured at the time of purchase. 
B)  include a punitive amount to discourage further fraud. 
C)  are measured at the time when the fraud is discovered. 
D)  are considered sunk costs and irrecoverable. 
E)  include speculative damages.

Question 8

Which of the following statements is true of the Private Securities Litigation Reform Act (PSLRA)?

Accepted Answer

A)  It was enacted by the Congress to eliminate the fraud-on-the-market presumption. 
B)  It is used by the Congress to limit the amount of damages private plaintiffs can recover and restrict attorney fees. 
C)  It usually fails to give provisions for requirements for the appointment of lead plaintiffs in securities class-action cases. 
D)  It requires that private plaintiffs who suffered injury could maintain private causes of action against third parties not directly responsible for a securities law violation. 
E)  It mandated that the Federal Trade Commission could pursue claims against third parties that are indirectly responsible for a securities law violation. 
A)  It was enacted by the Congress to eliminate the fraud-on-the-market presumption. 
B)  It is used by the Congress to limit the amount of damages private plaintiffs can recover and restrict attorney fees. 
C)  It usually fails to give provisions for requirements for the appointment of lead plaintiffs in securities class-action cases. 
D)  It requires that private plaintiffs who suffered injury could maintain private causes of action against third parties not directly responsible for a securities law violation. 
E)  It mandated that the Federal Trade Commission could pursue claims against third parties that are indirectly responsible for a securities law violation.

Question 9

A prospectus must conform to the statutory requirements.

Accepted Answer

A) True 
 B)False

Question 10

______ of the Sarbanes-Oxley Act requires CEOs and CFOs to certify the accuracy of the quarterly and annual financial statements filed with the Securities Exchange Commission.

Accepted Answer

A)  Section 906 
B)  Section 1107 
C)  Section 302 
D)  Section 802 
E)  Section 404 
A)  Section 906 
B)  Section 1107 
C)  Section 302 
D)  Section 802 
E)  Section 404

Question 11

What are the primary provisions of the Sarbanes-Oxley Act?

Accepted Answer

The Sarbanes-Oxley Act served to accompl

Question 12

According to the Securities Act of 1933,an individual who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale is referred to as the

Accepted Answer

A)  seller. 
B)  controlling person. 
C)  issuer. 
D)  underwriter. 
E)  bailee. 
A)  seller. 
B)  controlling person. 
C)  issuer. 
D)  underwriter. 
E)  bailee.

Question 13

Under the 1934 Act,an individual found guilty of filing false or misleading documents with the Securities and Exchange Commission (SEC)may be imprisoned up to

Accepted Answer

A)  5 years. 
B)  10 years. 
C)  15 years. 
D)  20 years. 
E)  25 years. 
A)  5 years. 
B)  10 years. 
C)  15 years. 
D)  20 years. 
E)  25 years.

Question 14

Registration by notification

Accepted Answer

A)  is required by those issuers who lack a proven record and who are beyond the scope of Securities Act of 1933. 
B)  refers to documents filed with the Securities & Exchange Commission (SE
C)  by a privately held company, declaring its intent to offer shares of its stock to the general public. 
C)  is required for those issuers of securities who must register with the Securities and Exchange Commission (SE
C)  and the duplicate documents are filed with the state's administrative agency. 
D)  refers to the quality certification process in which an independent and accredited quality auditor conducts an on-site audit of a firm. 
E)  allows issuers to offer securities for sale automatically after a stated time period expire unless the administrative agency takes action to prevent the offering. 
A)  is required by those issuers who lack a proven record and who are beyond the scope of Securities Act of 1933. 
B)  refers to documents filed with the Securities & Exchange Commission (SE
C)  by a privately held company, declaring its intent to offer shares of its stock to the general public. 
C)  is required for those issuers of securities who must register with the Securities and Exchange Commission (SE
C)  and the duplicate documents are filed with the state's administrative agency. 
D)  refers to the quality certification process in which an independent and accredited quality auditor conducts an on-site audit of a firm. 
E)  allows issuers to offer securities for sale automatically after a stated time period expire unless the administrative agency takes action to prevent the offering.

Question 15

Under the 1933 Act,the basic period of the statute of limitations starts to run even before the discovery of the untrue statement or omission.

Accepted Answer

A) True 
 B)False

Question 16

What is the misappropriation theory?

Accepted Answer

The Securities and Exchange Commission (

Question 17

Which of the following statements is true of the criminal liability imposed as per the Securities Act of 1934?

Accepted Answer

A)  Criminal liability is inapplicable in cases of false material statements in applications or reports. 
B)  Individuals found guilty of filing misleading documents are subject to maximum two years of imprisonment. 
C)  Individuals guilty of securities fraud may face a prison sentence of up to 25 years. 
D)  Business organizations found guilty of filing misleading documents have relaxed laws in comparison to individuals. 
E)  Regulating and imposing liabilities on trading on nonpublic information is beyond the scope of the act. 
A)  Criminal liability is inapplicable in cases of false material statements in applications or reports. 
B)  Individuals found guilty of filing misleading documents are subject to maximum two years of imprisonment. 
C)  Individuals guilty of securities fraud may face a prison sentence of up to 25 years. 
D)  Business organizations found guilty of filing misleading documents have relaxed laws in comparison to individuals. 
E)  Regulating and imposing liabilities on trading on nonpublic information is beyond the scope of the act.

Question 18

Tombstone ads refer to

Accepted Answer

A)  solicitations made during the waiting period. 
B)  notices filed during the posteffective period announcing that the sale of securities has ended. 
C)  announcements issued by the Securities and Exchange Commission (SE
C)  warning potential investors that a company is being investigated for fraud. 
D)  feedback from the Securities and Exchange Commission (SE
C)  requiring additional information or a clarification of supplied information needed to complete a filed registration statement. 
E)  statements that are required to be filled with the Securities and Exchange Commission (SE
C) . 
A)  solicitations made during the waiting period. 
B)  notices filed during the posteffective period announcing that the sale of securities has ended. 
C)  announcements issued by the Securities and Exchange Commission (SE
C)  warning potential investors that a company is being investigated for fraud. 
D)  feedback from the Securities and Exchange Commission (SE
C)  requiring additional information or a clarification of supplied information needed to complete a filed registration statement. 
E)  statements that are required to be filled with the Securities and Exchange Commission (SE
C) .

Question 19

Materiality is one of the several defenses that is recognized by the Securities Act of 1933 and may be used to avoid civil liability.Explain materiality.

Accepted Answer

The Securities and Exchange Commission a

Question 20

The ______ is a disclosure law which makes it illegal to use mails or any other means of interstate communication or transportation to sell securities without disclosing certain financial information to potential investors.

Accepted Answer

A)  Securities Exchange Act of 1934 
B)  Sherman Antitrust Act of 1890 
C)  Sarbanes-Oxley Act of 2002 
D)  Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
E)  Securities Act of 1933 
A)  Securities Exchange Act of 1934 
B)  Sherman Antitrust Act of 1890 
C)  Sarbanes-Oxley Act of 2002 
D)  Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
E)  Securities Act of 1933

Exam 17: Financial and Securities Regulations

Under the Sarbanes-Oxley Act,list the types of services that auditing firms are prohibited from providing to companies.

The Sarbanes-Oxley Act has increased the statute of limitations for various infringements of both the 1933 Act and the 1934 Act.

The Financial Stability Oversight Council was established by the

The burden of proof when alleging a due diligence defense is on the expert.

______ are brief announcements identifying the security and stating its price,by whom orders will be executed,and from whom a prospectus may be obtained.

How does the Securities Exchange Act of 1934 address the issue of insider transactions?

The buyer's damages of a defrauded purchaser of securities

Which of the following statements is true of the Private Securities Litigation Reform Act (PSLRA)?

A prospectus must conform to the statutory requirements.

______ of the Sarbanes-Oxley Act requires CEOs and CFOs to certify the accuracy of the quarterly and annual financial statements filed with the Securities Exchange Commission.

What are the primary provisions of the Sarbanes-Oxley Act?

According to the Securities Act of 1933,an individual who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale is referred to as the

Under the 1934 Act,an individual found guilty of filing false or misleading documents with the Securities and Exchange Commission (SEC)may be imprisoned up to

Registration by notification

Under the 1933 Act,the basic period of the statute of limitations starts to run even before the discovery of the untrue statement or omission.

What is the misappropriation theory?

Which of the following statements is true of the criminal liability imposed as per the Securities Act of 1934?

Tombstone ads refer to

Materiality is one of the several defenses that is recognized by the Securities Act of 1933 and may be used to avoid civil liability.Explain materiality.

The ______ is a disclosure law which makes it illegal to use mails or any other means of interstate communication or transportation to sell securities without disclosing certain financial information to potential investors.

Law As a Foundation for Business

The Role of Ethics in Decision Making

The Court System

Litigation

Alternative Dispute Resolution

The Constitution

The Property System

Contract Formation

Contractual Performance and Breach

Torts Affecting Business

Intellectual Property

International Law

Criminal Law and Business

Business Organizations

The Regulatory Process

Regulating Competitionantitrust Laws

Regulations Protecting Consumer Purchases, privacy, and Financial Activities

Environmental Regulation

Discrimination in Employment

Employment Laws

Labormanagement Relationship

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